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Wireless Broadband Challenges Include Rolling Up WISPS and Obtaining Stimulus Funding

GERMANTOWN, Md., January 31, 2010 – Two of the biggest challenges facing the expansion of wireless broadband in this country include the disparate number of rural and remaote wireless carriers, and how to ensure that stimulus funding goes to wireless carriers.

The Wireless Internet Service Provider Directory lists 1,860 WISPs in the U.S., while another directory includes over 2,500. Notwithstanding, there exist numerous other WISPs that are simply not contained in these directories.

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GERMANTOWN, Md., January 31, 2010 – Two of the biggest challenges facing the expansion of wireless broadband in this country include the disparate number of rural and remaote wireless carriers, and how to ensure that stimulus funding goes to wireless carriers.

The Wireless Internet Service Provider Directory lists 1,860 WISPs in the U.S., while another directory includes over 2,500. Notwithstanding, there exist numerous other WISPs that are simply not contained in these directories.

The larger wireless broadband companies are clearly in the market to acquire subscribers that are adjacent to their existing footprint. While this process often requires upgrading or rebuilding the wireless network being acquired, there is value in the subscriber base. Anticipated capital requirements will naturally be a reflection of overall value.

Many of these larger WISPs are also applicants for the $7.2 billion stimulus money currently allocated to extend broadband into underserved areas. Wireless broadband, including the newer WiMAX 802.16 technology, is ideally suited to serve these areas, many of which are rural in nature. The successful stimulus money applicants will increase the range of their footprint, thereby creating additional opportunity to acquire adjacent subscribers.

With or without stimulus money, the buyer will require capital to consummate these transactions. Seller financing and/or the inclusion of stock may mitigate this requirement. However, an aggressive acquisition campaign should be adequately funded, and include the aforementioned capital requirements.

While there are some larger fish to fry, many of these targeted acquisitions will be relatively small, perhaps in the area of 300 subscribers. Competition may exist for some acquisitions, while others may face less competition depending upon the region or state involved.

Although values will fluctuate, a number of recent WISP acquisitions have been in the area of 1 to 1.5 times revenue. Considerations include number of subscribers, revenues, age and capacity of equipment and demographics.

Given the scope of such a roll-up, a systematic approach is required to identify prospective acquisition candidates. Upon making initial contact, a successful campaign will usually involve face-to face dialogue with the owner.

An accurate assessment of his or her needs will best enable the buyer to offer an acceptable solution. Often there is a desire to remain involved with the buyer in some capacity going forward. This business involves providing service over a substantial geographic area, much of which is rural. Thus, the buyer must be prepared to patiently seek out opportunities which may require some creativity.

In addition to the issue of acquiring WISPs, there remains a significant issue about how the broadband stimulus program will affect small wireless carriers.

The stated purpose of the Broadband Technology Opportunities Program (BTOP) administered by the Department of Commerce is “to expand broadband internet access to unserved and underseved areas of the country.”

Grants are to be awarded for broadband infrastructure, public computer centers and sustainable broadband adoption. Areas to be addressed include broadband access, education, awareness, training and equipment. The stated purpose of the Broadband Initiatives Program (BIP) administered by RUS is largely the same.

The American Recovery and Reinvestment Act was signed into law by President Obama on February 17th, 2009. Phase One stimulus awards were scheduled to be announced in November and December of 2009, and were pushed back to December and January. As of January 15th a total of $183 million has been announced of the $7.2 million allocated for the BTOP and BIP programs. Thus, just 2.5% of the total funding allocated has been announced.

Of the $183 million that was announced, we have learned something about the Administration’s priorities. Nearly 70% of the awards announced were for “middle mile” infrastructure projects. The majority of last-mile awards actually went to telephone companies. Computer center awards went primarily to schools and libraries, as did awards for sustainable broadband adoption. Public-private partnerships are also a clear a priority.

As indicated, wireless broadband has unique advantages over other delivery methods in rural areas. High-speed internet can be extended into areas currently unserved by telephone and cable, and at lower capital costs. Worldwide, wireless broadband constitutes a major component of the overall high-speed internet delivery system.

Consequently, it would stand to reason that wireless broadband applicants should and would receive a significant share of the stimulus money allocated. Existing wireless broadband companies are pioneering the technology to extend service, and have the experience required to efficiently deploy the delivery system. Notwithstanding, these companies are also provide service to mobile devices, which have particular applications to education.

Yet another factor in this overall process is the Federal Communications Commission’s development of a National Broadband Plan. As a nation, the U.S. is behind several major countries in the deployment and adoption of high-speed internet access.

This process is important, and takes into consideration numerous issues. The original date for completion of the plan was February 17th, 2010, but will likely be extended to the middle of March.

Meanwhile, the stimulus award process is essentially proceeding along a parallel track. Round One applicants are naturally hopeful that awards will be forthcoming in the immediate future as announced. Perhaps the Round Two process will reflect certain elements of the actual NBP. The administration has also signaled that additional broadband funding may become available.

Given this evolving process and some of the lessons learned, how will the wireless broadband companies approach Round Two? The eventual results of Round One will be telling, and will no doubt be enough for some of the applicants.

The less successful applicants may wish to augment their Round Two applications to better address the aforementioned criteria for success. Thus, the search may be on to cultivate public/private relationships and place greater emphasis on education.

Editor’s Note: The preceeding guest analysis appears by special invitation of Broadband Census News. We invite officials, experts and individuals interested in the state of broadband to offer commentaries and analyses of their own. To offer a commentary, please e-mail commentary@broadbandcensus.com.

Jeff Eden has been in the telecommunications industry for 23 years, including working with cable franchising, retransmission consent, and WiMAX technologies. As an investment banker with Daniels and Associates in Denver, Jeff brokered $50 million in cable deals, primarily on the Southwest. While at Avalon Partners, he brokered internet service providers and satellite companies valued at $75 million and located in the Midwest, Maryland and Puerto Rico.

Digital Inclusion

Catherine McNally: The Digital Divide is an Equality Issue

To work toward equal access, more affordable options must be created, including community-based solutions.

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The author of this Expert Opinion is Catherine McNally, editorial lead for Reviews.org

Per the latest U.S. Census numbers, about one in four American households is stuck without internet. And a quarter million people with home internet still listen to the dial up screech when they hop online.

The majority of folks lacking home internet live in states with large rural populations and high rural poverty rates, like Mississippi, Arkansas and Alabama.

In Mississippi, as an example, 60% of homes don’t have broadband, satellite or dial up. And 53% of the state’s population is considered rural with a rural poverty rate of 23%.

Limited options and slow speeds top the list of reasons why rural states are home to high numbers of disconnected households. But steep costs are the most imminent barrier to home internet in rural areas.

According to a 2020 report on worldwide internet pricing by Cable.co.uk, the U.S. is the most expensive country for internet out of all developed Western nations. Here, internet costs an average of $60 a month. Internet in the cheapest country, Ukraine, costs an average of $6.40 a month.

Digital divide deep dive: Issaquena County, Mississippi

Issaquena County is Mississippi’s least-connected county with only 20% of homes paying for an internet connection. The median income there is $14,154 per individual in 2019, compared to a $31,133 national median income. The overall poverty rate in the county is 29%, which is about 16% higher than the U.S. as a whole.

That is a glaring contrast to the most-connected county in the most-connected state: Morgan County, Utah. Morgan County is home to 95% of households with an internet connection, the median individual income there was $37,091 in 2019 and the overall poverty rate is 3%.

Residents of Issaquena County are lucky if they can get download speeds of 25 Mbps, which is the Federal Communication Commission’s current definition of “high speed internet.” The slowest speeds available, 5–12 Mbps, are barely enough to stream in HD, let alone connect to a Zoom call.

If we narrow down our view to Valley Park, a town of just over 100 people in Issaquena County, we see that some residents have the option of a single AT&T DSL internet plan.

The AT&T plan costs $660 a year for speeds of 25 Mbps, which barely keep up with critical modern-day online tools like online learning and telehealth.

Our case study of Issaquena County and Valley Park, Mississippi, highlights further opportunities tied to home connectivity and equality:

  • Access to online learning. About 23.7% of Issaquena County residents have obtained a high school degree, while 3.2% have no schooling. Online education allows individuals to expand their knowledge and further their careers.
  • Greater access to livable wages.5% of residents earn a household income of $10k or less. This is further divided by race: In 2019, Black and African American residents earned a median household income of $21,146, while white residents earned a median household income of $52,188.
  • More employment opportunities. The employment rate in Issaquena County has steadily declined since 1990. Now, 10.6% of residents are considered unemployed.
  • Better access to health care. The U.S. Health Resources and Services Administration found that half of Mississippi’s residents live in counties with more than 2,000 patients per primary care physician. Issaquena County has been designated a Medically Underserved Area since 1978, meaning the county has a shortage of primary care, dental and/or mental health providers. Better access to telehealth also enables residents who cannot make the drive to the nearest hospital or clinic.

Solving the digital divide

To work toward equal access, more affordable options must be created. The Emergency Broadband Benefit fund is one option, but it remains largely untapped by American households. Subsidies like Lifeline may also lower barriers to internet access, but participation remains low.

Community-focused solutions are likely a better answer, such as Land O’Lakes’s American Connection Project. The project opened more than 2,800 free public Wi-Fi locations in spots like the Tractor Supply Store in Spooner, Wisconsin, in order to keep farming communities connected.

Also significant is this year’s infrastructure bill, which calls on states to determine localized needs and strategies for improving affordability and access to the internet.

State sponsored projects may also solve the severe lack of competition between U.S. broadband services. This should reduce costs last-mile providers incur to connect to middle-mile networks, which could, and should, pass savings down to households. Case in point: California recently introduced an open access middle-mile project with the goal of providing nondiscriminatory access. The bill passed unanimously.

A modernized definition of what qualifies as “high speed internet” would also benefit rural households. Currently, the standard of 25 Mbps download speeds and 3 Mbps upload speeds shorts rural users of opportunities tied to telehealth, online learning and remote work.

This outdated definition allows service providers to complete minimum-viable network expansions and mark areas as “connected.” It also de-incentivizes providers to improve existing-but-subpar networks, such as the 10 Mbps DSL line I found offered in nearby Morton, Mississippi.

One thing is clear: The way the U.S. has approached internet access in the past does not work. New strategies and policies are required to repair the digital divide. Internet access is a right, not a privilege in today’s world.

Catherine McNally is an Editorial Lead for Reviews.org, where she reviews internet service providers across the US. She has a passion for using data to highlight the need for better internet access across the US and believes that internet is a critical lifeline in today’s world. She has also published speed test and pricing reports to help everyday consumers make informed decisions. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Broadband's Impact

Steve Lacoff: A New Standard for the ‘Cloudification’ of Communications Services

The cloudification of communications services makes it easy to include voice, data, SMS, and video within any existing service.

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The author of this Expert Opinion is Steve Lacoff, general manager of Avalara for communications

The line of demarcation between what has traditionally been considered a telecommunications service was once very clear. It was tangible – there were wires, end points, towers, switches, facilities. Essentially, there was infrastructure required to relay voice or data from point A to point B.

Today that line is fuzzy, if not invisible. The legacy infrastructure remains, but an industry of cloud-based services that don’t require the physical connections has exploded. Voice, data, SMS, and video conferencing can now be conveniently delivered OTT. Enabled by simple API integrations, businesses can embed just one of these services or a complete communications platform-as-a-service (CPaaS) into an app, service, or product.

Cloudification is a game changer

This “cloudification” of communications services makes it easy to include voice, data, SMS, and video within any existing application, product, or service. These are essential components for many business models.

Consider these services we have come to rely on in our daily lives: food or grocery delivery, ride services, and business and personal communications. These require multiple methods of communication with shoppers, drivers, co-workers, watch party groups, and external business partners.

The exciting news is there is no end in sight. Use cases will continue to evolve and growth will continue to skyrocket. The scale cloud delivery accommodates is massive. These untethered, easy to embed communications services are a critical differentiator for both business-to-business and business-to-consumer buyers, and the lifeblood of the businesses providing both the end user subscriptions and the APIs.

In fact, one industry juggernaut saw H1 YoY video application service demand grow nearly 600% in 2020.

Not surprisingly, as business demand for these services increases smaller CPaaS players continue to enter the market to quickly snag market share. According to a recent IDC study, “the global market revenue for CPaaS reached $5.9bn in 2020, up from $4.26bn in 2019, and is expected to reach $17.71bn by 2024.”

Merger and acquisition activity is aligned with this hockey stick growth forecast. Large telcos, SaaS providers, and even other CPaaS providers are all on the hunt. Whether they want to add additional features to punch up their products or eliminate the competition in a very tight, nuanced market, the end game is clear – as the market expands, the players will ultimately contract leaving only the most competitive offerings.

Don’t let communications tax take you by surprise

One of the least understood risks when adding cloud-based voice, data, SMS, or video conferencing to an existing product or service is new eligibility for and exposure to the complex world of communications taxation. Making mistakes can get costly very quickly.

Here are some of the key pitfalls to keep an eye on:

  • Expanded nexus: Understanding communications tax nexus is different – and exceptionally more complicated – than sales tax. There are approximately 60,000 federal, state, local, and special taxing jurisdictions, each with uniquely complex rules that tend to change at their own pace. Rules are very different for each service.
  • More complex calculations: The more communications services you provide via API, the more complicated communications taxes will be. Each feature can be taxed at different rates in each individual jurisdiction, or the whole bundle can be taxed at one rate. It’s critical to monitor monthly to avoid audit issues.
  • Maintaining overall compliance: Just as tax rates and rules need to be maintained, so must tax and regulatory filing forms in each jurisdiction. Some of these are very long and require significant detail.  They must be filed in a timely, accurate cadence to avoid additional audit risk.

Bottom line: Don’t assume, be prepared! As these communications services become more pervasive a larger swath of technology providers will find themselves liable for communications tax. The more your business falls behind, the more it can cost you.

It pays to be proactive and prepared. Tax and legal advisory experts can help determine your level of risk, and tax and compliance software providers can help you keep up with changing rules and regulations. Don’t underestimate the ongoing value of networking with peers who are either struggling to answer the same questions or have already overcome the hurdles you’re facing today.

Steve Lacoff is General Manager of Avalara for Communications. With a focus on data, VoIP, and video streaming, Steve has spent 15 years in various product and marketing leadership roles in communications and technology industries, including Disney’s streaming services and Comcast technology solutions. Steve now drives business strategy on today’s changing industry landscape and associated tax impacts. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Expert Opinion

Jonathan Marashlian: The Legal Landscape Emerging for Robocalls Under the TRACED Act

The biggest risk is likely to come through enforcement actions by state attorneys general and civil litigation, says Marashlian.

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Jonathan Marashlian, Managing Partner of Marashlian & Donahue, LLC, The CommLaw Group, is the author of this Expert Opinion

Requirements for voice service providers emerging from the TRACED Act and the Federal Communications Commission orders that followed have changed the risks and threats to voice service providers.

Voice service providers have just passed some major milestones: Certifying SHAKEN and/or robocall mitigation in the FCC database and refusing calls from unregistered upstream providers. Does that mean it is time to kick back and relax?

Not at all. The legal landscape in the new STIR/SHAKEN era is much larger and more diverse than mere technical compliance with FCC requirements.

We are already seeing clear and unmistakable signs that compliance with the bare minimum requirements established by the FCC—implementing STIR/SHAKEN and robocall mitigation plan procedures—is insufficient to mitigate the myriad of business risks arising from the government onslaught against the scourge of illegal robocalling.

Reading the tea leaves, the biggest risk or threat is likely to come through enforcement actions by state attorneys general and civil litigation initiated by private parties. Wherever the legal landscape provides the opportunity to recover damages, class action plaintiff’s lawyers and attorneys for large enterprise consumers of voice services, such as call center operators, are certain to seize upon those opportunities.

‘Know your Customer’ rules come to the telecom industry

We anticipate that questions around the meaning of and extent to which the “Know Your Customer” requirements apply in different contexts will ultimately be answered through litigation and enforcement, and less so through the FCC regulatory rulemaking process. Questions around damages and who is or can be held responsible for originating, passing, or terminating illegal robocalls are also going to be fleshed out by regulatory enforcement and private litigation.

Perhaps the most significant risk, even more so than the FCC, are the federal and state consumer protection laws that are being developed around robocall mitigation. Starting with the Federal Trade Commission (FTC), where the FTC’s strict “known or should have known” standard is applied to hold voice service providers accountable for illegal robocallers using their networks.

Many service providers and telecom consultants pore over FCC regulations to try and understand the requirements. Is that sufficient? Are there other things they need to worry about?

FCC regulations are a good starting point and, telecommunications providers should stay abreast of updated regulations and releases. However, FCC regulatory compliance alone may not be enough to defend an action if provider’s face the FTC and state attorneys general’s “known or should have known” standard or the creative, evolving litigation strategy of the plaintiff’s bar.

Marriott filed a lawsuit in federal court against unknown perpetrators, “John Does,” who made illegal robocalls misusing Marriott’s name. Why would Marriott do that? What’s the point?

This is sheer speculation, but as often turns out, the actual perpetrators who harmed Marriott likely will be insolvent or outside the reach of Marriott. By using “John Does,” Marriott preserves its ability to amend its complaint to implead carriers and providers that carried or transported the fraudulent traffic.

Marriott could rely on the FTC’s “known or should have known” standard to show underlying carriers are the “John Does” that profited from bad actors (now insolvent or extra-judicial). It’s unlikely Marriott would commence this litigation without a strategy outside positive public relations for pursuing bad actions; rather, the “John Does” will likely turn out to be carriers of bad traffic who settle Marriott’s claims.

The Call Authentication Trust Anchor Working Group issued Caller ID Authentication Best Practices, which the FCC published and endorsed as voluntary measures. Then the Fourth Report and Order on Robocall Prevention mandated affirmative obligations to prevent service providers from originating robocalls. It seems like momentum is building toward holding service providers responsible for knowing their customers and the nature of their calls.

Based on recent trends, there is certainly momentum in that direction and Know Your Customer will likely continue to grow in importance. Thus, providers should ensure they have a good KYC policy in place, particularly as new risks emerge, and scrutiny grows. However, as discussed above, this appears largely driven by the FTC and state attorney general actions.

Of note, the Industry Traceback Group in July 2021 published a Policies and Procedures booklet with a best practices section. All voice service providers should review the booklet, and particularly the best practices. Accountability will keep mounting and the weakest link—the weakest KYC policy—will be the first to break, and that provider will be accountable and “holding the bag.”

Jonathan Marashlian is Managing Partner of Marashlian & Donahue, PLLC, The CommLaw Group, a full-service telecom law firm located in the Washington, D.C., area catering to businesses operating in and around the dynamic and diverse communications and information technology industries. Their clients include providers of VoIP, wireless and traditional telecommunications services, SaaS-based and cloud computing technologists and Internet-of-Things application and network vendors. The CommLaw Group has formed a Robocall Mitigation Response Team to help clients achieve the level of compliance needed to avoid the emerging threats of litigation and regulatory enforcement. Jonathan S. Marashlian may be reached by email or by phone at 703-714-1313.

A prior version of this piece was published on October 6, 2021, on TransNexus. This lightly-edited Expert Opinion is reprinted with permission. Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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