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Wireless Broadband Internet System White Papers


Evolving Metrics:
New Levels of Accuracy Reveal

Increased Take Rates

November 2009
Amended December 2009


 
Document Objective

This document describes the methodology and sources used in calculating a more current and accurate “Take Rate” for broadband in the United States, resulting in an increase over previous calculations.

Background

Thanks to funding through a variety of sources – the American Reinvestment and Recovery Act (ARRA), Broadband Stimulus under the BTOP, and BIP programs offered by the NTIA and USDA Rural Utilities Service (RUS) programs – much attention has been focused on broadband penetration, take rates and adoption rates in the United States. Recent round-one RUS program applications required broadband details, but a lack of information has limited both the availability of comprehensive data and overall study of the issue.

For years, the Federal Communications Commission (FCC) has collected data from broadband Internet providers using their Form 477. This information indicates the number of customers, broadband speeds, pricing and whether customers are residential or business class. Data had been tabulated at the Zip™ code level, but the collection process was recently modified to provide results at the Census Tract level instead.

Given access to this comprehensive database of information, it would be possible to determine broadband availability to a reasonable level of geographic accuracy. Unfortunately, access on a granular level outside of the FCC is not permitted, due in large part to agreements struck with the carriers to ensure their most important data assets would be protected from disclosure to competitors. 

Existing Resources

Each year, the FCC releases a report[1]to Congress called “The State of Broadband in the US.” The information in this report is provided at a state level, and has been used to tabulate broadband penetration rates. The calculation is determined by dividing the total number of reported residential subscriber lines by the total households reported[2]for the same time period in each state, resulting in a take rate for the state as a whole.

While this approach provides good directional information at macro levels, it does not provide the much-needed broadband penetration rates required for analysis of only the areas where broadband services are deployed.

In August of 2009, Brian Webster Consulting teamed with data provider Gadberry Group to design and prototype a method that would provide near address-level precision for broadband consumption and take rates. In the paragraphs that follow, we will describe what we believe to be the most accurate method possible to quantify take rates at micro levels of geography.

Data Sources

Three sources of data were used as primary information for the take rate model:

·      FCC Report to Congress “High Speed Services for Internet Access: Status as of June 30, 2008”

·      Census Bureau Annual Estimate of Housing Units for Counties

·      Gadberry’s Broadband Served Indicator Data

FCC Data

Each year, the FCC releases a report[3]to Congress called “The State of Broadband in the US.” The information in this report is provided at a state-level only.

Census Data

The Population Estimates Program publishes total resident population estimates and demographic components of change (births, deaths and migration) each year. It also publishes estimates by demographic characteristics (age, sex, race and Hispanic origin) for the nation, individual states and counties.

In addition to the resident population universe, the census bureau also produces population estimates for these universes: resident plus armed forces overseas, civilian, civilian non-institutionalized at the national level, and civilian at the state level. The reference date for estimates is July 1. Estimates usually are for the present and the past, while projections are estimates of the population for future dates.

The program develops these estimates with the assistance of the Federal State Cooperative Program for Population Estimates (FSCPE). These estimates are used in federal funding allocations, as denominators for vital rates and per capita time series, as survey controls, and in monitoring recent demographic changes. With each new issue of July 1 estimates, revisions are made to estimates for years back to the last census. Previously published estimates are superseded and archived.

The Population Estimates are also available on American Factfinder.

Broadband Indicator Data
Gadberry’s Broadband Served Indicator Data provides demographic data specifically designed to satisfy the requirements of the Broadband Initiative Program, as a part of the American Recovery and Reinvestment Act of 2009.

The Broadband Indicator is created using self-reported consumer information including Internet registrations, survey cards, online surveys, registrations and marketing solicitations data. The source data is compiled monthly by the provider, and the Broadband Indicator is constructed quarterly. The current sample size is over 20 million household records containing information indicating broadband use.

 
Take Rate Methodology

We began by quantifying the total number of households with access to broadband services. Using the broadband in-use data described above, census blocks with reported active broadband subscribers were identified, as well as the number of occupied household units in each block for 2008. When totaled, the number of households in these census blocks provided the number of homes passed by broadband services. There were no efforts to determine the type of technology, pricing or speed available.

Armed with this information, the number of active broadband residential lines for each state (as per the FCC report) was divided by the total households in the active BB census blocks. The result is an accurate penetration rate in the areas where broadband services are known to be available, as well as the census blocks where broadband is unavailable. Subtracting the total households with active broadband available from the total households for the state gave the final result of homes without access to broadband.

While most will agree that many states have large geographic areas with no access to broadband services, examining the data in the table below reveals that the percentage of households without access is smaller than many estimated. Much of this variance is due to sociological behaviors and patterns of settlement over time.

 

The census block, from a geographic standpoint, will vary in size based on population (and subsequently households). In sparsely populated areas, a census block may contain a large land area but represent very few households. In a metropolitan area, on the other hand, a census block may be no larger than a city block but include many homes and/or multi-family dwelling units. So, even though it may appear on a map that large areas of a state lack access to broadband, the number and percentage of households might be small in comparison to the land area.

 

AZ BB Census Blocks

Brian Webster Consulting

www.wirelessmapping.com

Figure 1:  Arizona Broadband Classified Census Blocks

The image above for the state of Arizona shows a large amount of land area without reported broadband use. Yet, Arizona has a 75.13% adoption rate where broadband services are available. The take rate averaged over the whole state is 57.86%. Only 22.99% of the homes statewide do not have access to broadband.

 

 

AR BB Census Blocks

Brian Webster Consulting

www.wirelessmapping.com

Figure 2:  Arkansas Broadband Classified Census Blocks
 
 
 
State

 Homes July 2008

 2008 Broadband Res Lines

2008 Res Take Rate

Statewide

 Households with BB Available

Take Rate Where BB is Available

Difference  Available to Statewide

Number of Homes Without Access to BB

% Homes without BB Access

AK

             283,357

           156,793

55.33%

             175,379

89.40%

34.07%

           107,978

38.11%

AL

          2,158,576

           909,945

42.15%

          1,633,780

55.70%

13.54%

           524,796

24.31%

AR

          1,298,137

           612,182

47.16%

             927,961

65.97%

18.81%

           370,176

28.52%

AZ

          2,722,725

        1,575,252

57.86%

          2,096,738

75.13%

17.27%

           625,987

22.99%

CA

        13,393,878

      10,406,479

77.70%

        12,018,850

86.58%

8.89%

        1,375,028

10.27%

CO

          2,152,040

        1,315,361

61.12%

          1,743,132

75.46%

14.34%

           408,908

19.00%

CT

          1,443,115

        1,135,798

78.70%

          1,360,979

83.45%

4.75%

             82,136

5.69%

DC

             285,353

           191,505

67.11%

             243,435

78.67%

11.56%

             41,918

14.69%

DE

             392,965

           240,153

61.11%

             320,355

74.96%

13.85%

             72,610

18.48%

FL

          8,800,294

        5,425,497

61.65%

          7,120,733

76.19%

14.54%

        1,679,561

19.09%

GA

          4,026,082

        2,402,283

59.67%

          3,263,180

73.62%

13.95%

           762,902

18.95%

HI

             512,881

           378,477

73.79%

             394,369

95.97%

22.18%

           118,512

23.11%

IA

          1,329,352

           632,294

47.56%

             979,854

64.53%

16.97%

           349,498

26.29%

ID

             641,479

           343,184

53.50%

             454,827

75.45%

21.95%

           186,652

29.10%

IL

          5,276,979

        3,471,815

65.79%

          4,383,916

79.19%

13.40%

           893,063

16.92%

IN

          2,795,024

        1,274,862

45.61%

          2,207,438

57.75%

12.14%

           587,586

21.02%

KS

          1,226,859

           721,808

58.83%

             922,683

78.23%

19.40%

           304,176

24.79%

KY

          1,920,581

           932,158

48.54%

          1,531,031

60.88%

12.35%

           389,550

20.28%

LA

          1,883,167

        1,111,304

59.01%

          1,585,612

70.09%

11.07%

           297,555

15.80%

MA

          2,735,443

        1,946,046

71.14%

          2,491,976

78.09%

6.95%

           243,467

8.90%

MD

          2,333,064

        1,767,213

75.75%

          2,097,156

84.27%

8.52%

           235,908

10.11%

ME

             700,480

           309,458

44.18%

             463,399

66.78%

22.60%

           237,081

33.85%

MI

          4,535,323

        2,262,822

49.89%

          3,664,400

61.75%

11.86%

           870,923

19.20%

MN

          2,331,619

        1,288,882

55.28%

          1,811,539

71.15%

15.87%

           520,080

22.31%

MO

          2,663,977

        1,496,075

56.16%

          2,010,489

74.41%

18.25%

           653,488

24.53%

MS

          1,267,231

           435,193

34.34%

             931,606

46.71%

12.37%

           335,625

26.48%

MT

             438,282

           198,534

45.30%

             269,742

73.60%

28.30%

           168,540

38.45%

NC

          4,201,378

        2,280,220

54.27%

          3,386,502

67.33%

13.06%

           814,876

19.40%

ND

             313,332

           145,593

46.47%

             188,651

77.18%

30.71%

           124,681

39.79%

NE

             786,334

           431,124

54.83%

             562,337

76.67%

21.84%

           223,997

28.49%

NH

             597,129

           363,328

60.85%

             471,599

77.04%

16.20%

           125,530

21.02%

NJ

          3,517,293

        2,716,982

77.25%

          3,133,802

86.70%

9.45%

           383,491

10.90%

NM

             871,700

           374,043

42.91%

             564,196

66.30%

23.39%

           307,504

35.28%

NV

          1,127,061

           780,141

69.22%

             915,596

85.21%

15.99%

           211,465

18.76%

NY

          7,977,286

        5,470,914

68.58%

          6,988,378

78.29%

9.70%

           988,908

12.40%

OH

          5,079,873

        2,838,688

55.88%

          4,391,866

64.64%

8.75%

           688,007

13.54%

OK

          1,637,138

           880,666

53.79%

          1,154,522

76.28%

22.49%

           482,616

29.48%

OR

          1,628,826

        1,081,837

66.42%

          1,331,670

81.24%

14.82%

           297,156

18.24%

PA

          5,496,336

        3,097,119

56.35%

          4,563,812

67.86%

11.51%

           932,524

16.97%

RI

             451,753

           297,643

65.89%

             411,553

72.32%

6.44%

             40,200

8.90%

SC

          2,056,127

           942,688

45.85%

          1,578,466

59.72%

13.87%

           477,661

23.23%

SD

             361,482

           170,380

47.13%

             227,352

74.94%

27.81%

           134,130

37.11%

TN

          2,758,171

        1,346,820

48.83%

          2,327,985

57.85%

9.02%

           430,186

15.60%

TX

          9,598,579

        6,198,779

64.58%

          7,845,124

79.01%

14.43%

        1,753,455

18.27%

UT

             944,347

           552,567

58.51%

             774,276

71.37%

12.85%

           170,071

18.01%

VA

          3,306,389

        1,900,624

57.48%

          2,815,194

67.51%

10.03%

           491,195

14.86%

VT

             312,617

           136,780

43.75%

             205,400

66.59%

22.84%

           107,217

34.30%

WA

          2,791,597

        1,783,539

63.89%

          2,344,684

76.07%

12.18%

           446,913

16.01%

WI

          2,569,430

        1,384,836

53.90%

          2,041,611

67.83%

13.93%

           527,819

20.54%

WV

             886,430

           314,072

35.43%

             471,193

66.65%

31.22%

           415,237

46.84%

WY

             246,393

           116,661

47.35%

             146,697

79.53%

32.18%

             99,696

40.46%

Totals

129,065,264

78,547,417

60.86%

105,947,025

72.90%

12.05%

23,118,239

17.91%

Table 1:  Comparison of Broadband Take Rates by State

 

IN BB Census Blocks

Brian Webster Consulting

www.wirelessmapping.com

Figure 3:  Indiana Broadband Classified Census Blocks

 

 

 

MI BB Census Blocks

Brian Webster Consulting

www.wirelessmapping.com

Figure 4: Michigan Broadband Classified Census Blocks
AZ Aerial Example with blocks

Brian Webster Consulting

www.wirelessmapping.com

Figure 5:  Aerial map of blocks with no access and occupied households.

 

 

Conclusion

Using the approach described in this document, the estimate of the national broadband adoption rate where services are available stands at 72.9%. The total number of homes with access to broadband is 105,947,025. The number of homes that do not have access to broadband is 23,118,239, which represents 17.91% of currently occupied homes (based on 2008 estimates). When compared to the current accepted industry estimates, the new approach results in a 10% increase in previously quoted adoption rates.

Based on these higher adoption rates, it is now possible to reevaluate additional broadband deployments or expansions to areas that might not have been considered financially sustainable previously, based on their low household density per square mile. Armed with more accurate data and the ability to identify exactly where unserved homes are located allows for more informed deployment strategies, and possibly more served households.

Purpose of Brief

This brief is not intended to go into high-level detail regarding speed, pricing or type of technology/topology deployed, nor is it intended to quantify the ranking of the US in worldwide broadband adoption rates. The Berkman Center recently published a report for the FCC with those details, available at http://www.fcc.gov/stage/pdf/Berkman_Center_Broadband_Study_13Oct09.pdf.

 

Rather, the primary focus of this brief is to identify the potential broadband market as a whole. Take rate statistics have a major impact in forecasting the financial viability and sustainability for private sector broadband networks. To date, most models assume a much lower adoption rate, which could make a difference in decisions to deploy broadband in the remaining unserved markets.

About Brian Webster Consulting

Brian Webster Consulting and wirelessmapping.com were created to fill a need for affordable wireless engineering services for those unable to justify the cost of hiring and maintaining fulltime RF Engineering staff. Projects are approached with a creative eye, cost-conscious methodology and nearly 20 years of industry experience. The integration of Geographic Information Systems (GIS) helps present complex engineering and demographic information in clear, color diagrams that help the end user make actionable business decisions. These capabilities allow demographic data and market analysis information to be included as overlays to a client’s engineering diagrams, along with raw data for input to financial models.

Brian has extensive experience in municipal wireless (Muni) network design. Most recently, he was an RF Engineering Manager at EarthLink and was responsible for designing the City of Philadelphia’s municipal wireless network, one of the world’s largest wireless mesh deployments. His responsibilities included reviewing and approving the work of EarthLink engineers and Motorola contractors.  http://www.wirelessmapping.com/

 About The Gadberry Group

The Gadberry Group provides location-based services and information data products for clients who demand the most current, accurate and precise household and population data for their site location analysis. MicroBuildÒ, Gadberry’s patent-pending product, is unique because only MicroBuildÒ uses consumer data at the rooftop level to deliver quarterly household and population counts beginning at the census block level. http://www.gadberry.net/

 


 

Addendum – 12/18/09

 

After publishing this report additional data relative to the FCC Report was discovered:

 

First, the total households stated for each state were total housing units and not occupied housing units. The households passed figures were of occupied households. It is only proper to compare the same on the statewide basis. This would have actually increased the take rate had the occupied housing units totals been used. This error is corrected in the modified data table.

 

Second and most important, in the FCC Report to Congress “High Speed Services for Internet Access: Status as of June 30, 2008”, the total number of residential lines reported included data from the mobile wireless broadband operators (Cellular and PCS carriers). In a separate report and order #08-89 released by the FCC, it is stated that the wireless mobile broadband carriers had reported the number of data capable handsets, not the number of customers that actually subscribed to data or Internet plans. Upon other research through industry sources, it was discovered that less than 3% of the mobile broadband subscribers use said service as their sole connection to the Internet. The residential lines reported by the mobile wireless carriers represent 14.5% of the total lines stated in the FCC report.

Knowing this information a decision was made to reduce the number of reported residential lines in each state by 14.5% and run new take rate calculations. There were no breakdowns of the mobile wireless subscribers by state; the reduction was applied evenly over all states. In the new table a lower total of residential high-speed lines is reported as compared to the original study data.

As an additional point of study, a confidence level for each census block was determined. On a state-by-state basis those census blocks that had only one or two respondent data points were separated and noted as low confidence. Using that method, separate high confidence columns have been added to the report. The high confidence columns are those census blocks with three or more separate consumer reports of broadband activity.

 


 

STATE

 Occupied Households July 2008

 2008 Residential Lines minus mobile wireless

2008 Statewide Res Take Rate

 Households with BB Available

 Households with BB Available High confidence

Take Rate Where BB is Available

Take Rate Where Available High Confidence

Number of Households Without Access to BB

Number of Households without Access to BB High Confidence

% Households without BB Access

% Households without BB Access High Confidence

AK

         237,034

       134,058

56.56%

        175,379

      146,376

76.44%

91.58%

         61,655

         90,658

26.01%

38.25%

AL

1,938,130

       778,003

40.14%

     1,633,780

   1,221,322

47.62%

63.70%

       304,350

       716,808

15.70%

36.98%

AR

      1,175,023

       523,416

44.55%

        927,961

      660,774

56.40%

79.21%

       247,062

       514,249

21.03%

43.77%

AZ

      2,336,959

    1,346,840

57.63%

     2,096,738

   1,841,745

64.24%

73.13%

       240,221

       495,214

10.28%

21.19%

CA

    12,764,753

    8,897,540

69.70%

   12,018,850

 10,655,512

74.03%

83.50%

       745,903

    2,109,241

5.84%

16.52%

CO

      1,959,789

    1,124,634

57.39%

     1,743,132

   1,476,533

64.52%

76.17%

       216,657

       483,256

11.06%

24.66%

CT

      1,405,509

       971,107

69.09%

     1,360,979

   1,235,433

71.35%

78.60%

         44,530

       170,076

3.17%

12.10%

DC

         256,110

       163,737

63.93%

        243,435

      210,330

67.26%

77.85%

         12,675

         45,780

4.95%

17.88%

DE

        343,554

       205,331

59.77%

        320,355

      277,498

64.09%

73.99%

         23,199

         66,056

6.75%

19.23%

FL

      7,628,143

    4,638,800

60.81%

     7,120,733

   6,171,291

65.14%

75.17%

       507,410

    1,456,852

6.65%

19.10%

GA

      3,652,043

    2,053,952

56.24%

     3,263,180

   2,780,748

62.94%

73.86%

       388,863

       871,295

10.65%

23.86%

HI

         436,273

       323,598

74.17%

        394,369

      369,281

82.05%

87.63%

         41,904

         66,992

9.60%

15.36%

IA

      1,247,553

       540,611

43.33%

        979,854

      677,745

55.17%

79.77%

       267,699

       569,808

21.46%

45.67%

ID

         562,067

       293,422

52.20%

        454,827

      344,356

64.51%

85.21%

       107,240

       217,711

19.08%

38.73%

IL

      4,851,822

    2,968,402

61.18%

     4,383,916

   3,662,089

67.71%

81.06%

       467,906

    1,189,733

9.64%

24.52%

IN

      2,543,090

    1,090,007

42.86%

     2,207,438

   1,706,453

49.38%

63.88%

       335,652

       836,637

13.20%

32.90%

KS

      1,118,858

       617,146

55.16%

        922,683

      698,027

66.89%

88.41%

       196,175

       420,831

17.53%

37.61%

KY

      1,762,321

       796,995

45.22%

     1,531,031

   1,246,235

52.06%

63.95%

       231,290

       516,086

13.12%

29.28%

LA

      1,792,856

       950,165

53.00%

     1,585,612

   1,262,178

59.92%

75.28%

       207,244

       530,678

11.56%

29.60%

MA

      2,615,877

    1,663,869

63.61%

     2,491,976

   2,171,845

66.77%

76.61%

       123,901

       444,032

4.74%

16.97%

MD

      2,202,016

    1,510,967

68.62%

     2,097,156

   1,905,568

72.05%

79.29%

       104,860

       296,448

4.76%

13.46%

ME

         555,653

       264,587

47.62%

        463,399

      345,519

57.10%

76.58%

         92,254

       210,134

16.60%

37.82%

MI

      4,009,186

    1,934,713

48.26%

     3,664,400

   3,049,933

52.80%

63.43%

       344,786

       959,253

8.60%

23.93%

MN

      2,096,616

    1,101,994

52.56%

     1,811,539

   1,444,866

60.83%

76.27%

       285,077

       651,750

13.60%

31.09%

MO

      2,387,051

    1,279,144

53.59%

     2,010,489

   1,589,240

63.62%

80.49%

       376,562

       797,811

15.78%

33.42%

MS

      1,165,764

       372,090

31.92%

        931,606

      660,351

39.94%

56.35%

       234,158

       505,413

20.09%

43.35%

MT

         394,719

       169,747

43.00%

        269,742

      176,219

62.93%

96.33%

       124,977

       218,500

31.66%

55.36%

NC

      3,756,683

    1,949,588

51.90%

     3,386,502

   2,804,418

57.57%

69.52%

       370,181

       952,265

9.85%

25.35%

ND

         275,615

       124,482

45.17%

        188,651

      133,651

65.99%

93.14%

         86,964

       141,964

31.55%

51.51%

NE

         730,577

       368,611

50.45%

        562,337

      414,182

65.55%

89.00%

       168,240

       316,395

23.03%

43.31%

NH

        523,124

       310,645

59.38%

        471,599

      394,238

65.87%

78.80%

         51,525

       128,886

9.85%

24.64%

NJ

      3,284,958

    2,323,020

70.72%

     3,133,802

   2,716,460

74.13%

85.52%

       151,156

       568,498

4.60%

17.31%

NM

         764,708

       319,807

41.82%

        564,196

      414,933

56.68%

77.07%

       200,512

       349,775

26.22%

45.74%

NV

         994,992

       667,021

67.04%

        915,596

      831,605

72.85%

80.21%

         79,396

       163,387

7.98%

16.42%

NY

      7,336,803

    4,677,631

63.76%

     6,988,378

   6,332,820

66.93%

73.86%

       348,425

    1,003,983

4.75%

13.68%

OH

      4,735,094

    2,427,078

51.26%

     4,391,866

   3,778,138

55.26%

64.24%

       343,228

       956,956

7.25%

20.21%

OK

      1,477,008

       752,969

50.98%

     1,154,522

      890,260

65.22%

84.58%

       322,486

       586,748

21.83%

39.73%

OR

      1,516,658

       924,971

60.99%

     1,331,670

   1,082,391

69.46%

85.46%

       184,988

       434,267

12.20%

28.63%

PA

      5,062,337

    2,648,037

52.31%

     4,563,812

   3,758,275

58.02%

70.46%

       498,525

    1,304,062

9.85%

25.76%

RI

         432,696

       254,485

58.81%

        411,553

      345,384

61.84%

73.68%

         21,143

         87,312

4.89%

20.18%

SC

      1,825,000

       805,998

44.16%

     1,578,466

   1,232,290

51.06%

65.41%

       246,534

       592,710

13.51%

32.48%

SD

         317,343

       145,675

45.90%

        227,352

      156,285

64.07%

93.21%

         89,991

       161,058

28.36%

50.75%

TN

      2,556,644

    1,151,531

45.04%

     2,327,985

   1,927,177

49.46%

59.75%

       228,659

       629,467

8.94%

24.62%

TX

      8,924,973

    5,299,956

59.38%

     7,845,124

   6,478,688

67.56%

81.81%

    1,079,849

    2,446,285

12.10%

27.41%

UT

         857,504

       472,445

55.10%

        774,276

      665,293

61.02%

71.01%

         83,228

       192,211

9.71%

22.42%

VA

     3,093,328

    1,625,034

52.53%

     2,815,194

   2,459,003

57.72%

66.09%

       278,134

       634,325

8.99%

20.51%

VT

         253,271

       116,947

46.17%

        205,400

      147,573

56.94%

79.25%

         47,871

       105,698

18.90%

41.73%

WA

      2,581,680

    1,524,926

59.07%

     2,344,684

   1,981,047

65.04%

76.98%

       236,996

       600,633

9.18%

23.27%

WI

      2,291,855

    1,184,035

51.66%

     2,041,611

   1,626,833

58.00%

72.78%

       250,244

       665,022

10.92%

29.02%

WV

         757,767

       268,532

35.44%

        471,193

      354,317

56.99%

75.79%

       286,574

       403,450

37.82%

53.24%

WY

         215,923

         99,745

46.19%

        146,697

        92,839

67.99%

107.44%

         69,226

       123,084

32.06%

57.00%

Totals

  118,005,310

  67,158,042

56.91%

 105,947,025

 89,005,567

63.39%

75.45%

  12,058,285

  28,999,743

10.22%

24.57%

Table 2 – Modified Comparison of Broadband Take Rates by State


 

[1] High-Speed Services for Internet Access: Status as of June 30, 2008 www.fcc.gov/wcb/stats

 

[2] http://www.census.gov/popest/housing/HU-EST2008-4.html

[3] High-Speed Services for Internet Access: Status as of June 30, 2008 www.fcc.gov/wcb/stats

 


Leading Edge or Bleeding Edge - Determining When a Wireless Site Fits Your Business Plan

WiFi is a very real and exciting opportunity where tech savvy entrepreneurs are redefining our world before our eyes. Buzzwords like Wireless Broadband, Wi-Fi, WiMax, Access Point, BTS, 802.11a, 802.11b, 802.11g, 802.11n, WAP, Hot Spot 2.4Ghz, 5Ghz, 5.8Ghz, CPE, Backhaul, Mesh, Open Source and COTS are all around us. Many are considering joining the ranks of the Wireless Internet Service Providers or WISP’s. Hey, this is not rocket surgery, right? Nope, rocket surgery is easier, much easier. You can see the rocket.

If you fail to plan, plan to fail. It is not enough to just mesh your acronyms, understand the hardware, crack open a box; plug it in, and your Rupert Murdock’s next apprentice. This is business; remember the basics, do the homework. Things like; a business plan, network design, equipment, installation, integration, software specification and cost analysis is just the start and hardly enough to determine if you have a winning return on investment (ROI) model. Back in the days of Wing Commander and dial-up ISP’s it was relatively easy to predict who you could provide services to. You merely did research on available phone number exchanges and calling areas. As long as people had a telephone, ring-ring cha-ching, they were potential customers.

Now, just because your barber and broker have mastered the buzzwords (sort of) and the spectrum is unlicensed, it does not mean that it is open mike night at the Grand Ole Opry… yet. In the wireless broadband world if you want to maximize that opportunity, you will need to conduct some very advanced field and propagation studies on both radio system range and market penetration. Then after defining the realistic sufferable degradation of your network and understanding the implication of the resulting demographics you may just begin to see the rocket. Predicting the coverage area is a complex and critical task. Contrary to your barber and broker’s best advice this in not plug and play technology and not as simple as reading what the manufacturer says is the maximum range. These numbers are usually under ideal conditions and the most favorable of base station sites. In reality, you must look at many factors.

  • First you should consider the terrain or topography of the area where you want to offer service. Hey, “I know this,” you say “higher is better, line of sight, right?” The proper answer is, “Yes”, “No”, “Maybe” and “it depends”. Hills, mountains, morphology, clutter, time of year, weather and their proximal impact to your base station and customer sites should be well defined. This can be a very challenging, expensive and unnerving problem to solve, especially after you have started to build your network and have live customers on line.
     
  • Second, the equipment to be used and its performance to cost analysis. This needs to be considered for both the base station site as well as the customer premise equipment (CPE). The combination and performance of these will greatly affect both the footprint of your site as well as the capital required to acquire each customer and can change your ROI in a heartbeat.
     
  • The third factor is demographics. Once you have the first two well in hand, there are some interesting methods to integrate or define the realistic range of your site, Geographic Information Systems (GIS), Census data and equipment used. Once these layers have been peeled back a study of the demographics of this area can reveal information like population, number of households, income level and wireless competitive market value analysis, existing ISP’s, legacy and incumbent technologies. Having this data goes a long way towards determining site viability based on your particular business model. Now that’s a rocket! Scalpel!
Let’s look at each factor in more detail:

Terrain and Topography

Hills and mountains can be used to your advantage in a properly designed system. They can isolate a whole group of customers focusing on only those you wish to serve with a particular site. Since many WISP’s operate in the unlicensed radio spectrum, frequency management is critical. Not only do you have limited resources but you also have to share it with all other part 15 devices (in the US). Using the terrain to contain a signal to a limited area will allow you to reuse those same frequencies in another area. This same technique can also help to minimize the areas where you pick up interfering signals. Doing this in conjunction with narrow beam directional antennas can keep your options open for growth, expansion and spectrum mitigation in the future. You may have to be creative and flexible when coexisting and managing your allotted spectrum.

Wireless Coverage Map for High Speed Internet System using the terrain to contain the signal
Image © 2004 by Wirelessmapping.com
Here is an example of a site that uses a mountain to block the signal from going to the West. This is one technique for containing a signal to a particular area and minimizing the direction from where you can receive interference.

Equipment Selection

One key factor in designing a wireless broadband system is a balanced path. Essentially that is to say that WiFi communication is a two way street and data packets have to be exchanged in both directions. It is not good for your base station site to broadcast over great distances if your clients cannot talk back to it. The range of your system will be limited to the talk back range of the client devices. If your business plan relies on devices such as PCMCIA cards or built in radios such as the Centrino laptops, you may have extremely short range and a limited client base. If you plan to have maximum range and reach the most customers possible, then you must consider incorporating CPE equipment that employs some sort of outdoor antenna solution. There are many different sources and prices for CPE equipment and it will vary based on the technology you chose for your base station systems. Be sure that your solution is FCC type accepted as a complete system, this includes the combination of radio and antenna. Mixing and matching antennas and radios from different sources will not always be a certified solution. The better performing units will have the radio and antenna integrated on the customer unit or have the radio located as close to the antenna as possible. This minimizes any feed line loss between the radio and antenna and gets the most energy possible over the air; this also applies to the received signal. Many times an integrated unit will be powered via the Ethernet cable, this makes an installation at your customer site easier since you won’t have to drill big holes for the antenna line and you only have to worry about an Ethernet cable. Units with the most antenna gain will help for those clients located farthest away from the base unit to get a good link.

On the base station, proper antenna selection should be considered. Panel or sector antennas can be very useful with the additional gain they offer and the directional pattern they employ. With a directional pattern, you can point the signal where you need it and isolate the directions from where you will receive interference. To maintain a good quality of service you want to have as much signal at both ends of a link as possible, when the noise levels fluctuate, the customer still maintains connectivity. Here are some examples of the differences to expect based on CPE unit selection.

RF Propagation Coverage Map for an amplified wireless hotspot
Image © 2004 by Wirelessmapping.com
This is an example of the coverage you can expect (shown in green) with an outdoor 802.11 access point and antenna system using standard wireless clients like PCMCIA cards.


 Map of Wireless Service Area for a WISP using amplifier and high gain CPE antennas
Image © 2004 by Wirelessmapping.com
This is the same outdoor site with proper antenna selection. The difference shown is the effect of having client units using outdoor antennas and having them mounted in a fixed loaction near the roof. You can clearly see the increase in service area.

The selection of CPE units can change your coverage area a great deal affecting your financial forecast. It will add from $200 to $500 in additional cost to each customer access point when outdoor customer premise units are used. Additionally you must calculate installation and customer support costs.

Basic Demographics

Of all the factors in choosing proper base site locations, demographic data and its real world footprint should be well defined considered and understood before proceeding with construction. Once the range for a transmitter has been determined, knowing the population and number of households within this area is crucial. Most individuals can find basic demographic information about a particular city or town; the problem with this data is that it rarely coincides with the smaller area that the wireless transmitter covers. Producing demographic reports specific to the coverage of the site arms business owners with the information they need. The bottom line is you need to know if the market has enough potential customers to support the new system. Being able to show this same data will also help determine if the investment in outdoor CPE terminals will increase the potential customer base enough to warrant the expense. The chart below illustrates a sample of these demographics for the coverage maps used in this article:

Distance from Site Number of Households Broadband Penetration % Percent of Broadband Marketshare Potential # of Customers Population
.5km
491
50
15
36
938
3km
1244
50
15
93
2496

This example assumes there are other broadband options for consumers in the market. While the market share and broadband penetration rates are estimates, you can easily adjust that data for your market. The real key here is knowing the actual number of households and population of the area you will be able to serve.

Conclusion

This article is not meant to cover every detail of proper site design and analysis, especially in the area of radio frequency engineering. I hoped to Increase your knowledge base as a high-end techno consumer, get your arms around this leading edge technology, and understand that there are many options to consider when deploying an outdoor wireless broadband system. There are well defined tools and techniques that can help you make smart choices about site selection and market conditions before you expend capital and start construction. This should be welcome news to investors and potential WISP entrepreneurs alike. Whether you are building your own network or hiring outside consultants, securing this data and truly understanding your real world market impact should be the cornerstone of your business plan. If you don’t believe me, just ask your broker and barber. Now how about that beautiful singing voice of yours, can you hear me now….?

www.wirelessmapping.com


Broadband Market Demographics

     Less than 5% of towns in the US with a population of 10,000 or less have access to broadband technology. High-speed (broadband) Internet access in many rural locations and areas beyond the reach of Cable and DSL (Digital Subscriber Line) is virtually unavailable. Current broadband technologies are simply not being expanded to rural populations because the costs associated with rapid expansion of cabled high-speed access are exorbitant, and reliance on telecom exchange carrier facilities slows infrastructure expansion. This lack of connectivity in rural communities adds to a nation-wide "digital divide", or a perceived gap between those who have current broadband technology and those who do not.

US Broadband Penetration 45.2% - US Internet Penetration Nearly 75% - March 2004 Bandwidth Report

     Overall, broadband grew by 2.14% in February, with 45.15% of Internet-connected U.S. households enjoying a high-speed connection. 54.85% of US home users dial into the Internet with "narrowband" connections of 56Kbps or less.* Nearly 75% of U.S. households have Internet access at home, according to a Nielsen//NetRatings survey. The charts below, derived from Nielsen//NetRatings, show trends in connection speeds to the Internet for users in the United States.

Home Connectivity in the US

     As of February 2004, most users in the US connect to the Internet using dial-up modems of 56Kbps or less. 44.4% use 56Kbps modems, 7.6% use 28/33.3Kbps, and 2.9% use 14.4Kbps modems. In total, 54.85% of home users in the US connect to the Internet at 56Kbps or less (see Figure 1).

Graph Showing Broadband Growth in the US

Figure 1: Web Connection Speed Trends - Home Users (US)
Source: Nielsen//NetRatings
Broadband Growth in the US
 

     Broadband penetration in US homes increased by 2.14% in February. As of February 2004 broadband penetration was at 45.15%, up from 43.01% in January. This is higher than the average increase in broadband of .75% per month from October 1999 to December 2003. Extrapolating the data provided by Nielsen//NetRatings, broadband share in the US should exceed 50% by June of 2004 (see Figure 2).

Broadband Connection Speed Trend - Home Users (US)

Home Users Broadband Connection Speed Graph

Figure 2: Broadband Connection Speed Trend - Home Users (US)
Extrapolated by Web Site Optimization, LLC from Nielsen//NetRatings data.

Work Connectivity in the US

     Most workers in the US enjoy high-speed connections to the Internet. Most use a high-speed line such as a T1 connection, and share bandwidth between computers connected to an Ethernet network. The speed of each connection decreases as more employees hook up to the LAN. As of February of 2004, of those connected to the Internet, 77.2% of US users at work enjoy a high-speed connection, up 2.1% from 75.1% in January. 22.8% connect from work at 56Kbps or less (see Figure 3). As more users get access to high-speed connectivity at work, they desire the same performance for their home systems. This also illustrates a large market potential for business class customers. These are a longer sales cycle as most are under long term contracts with their existing high-speed providers. They are very interested in switching to services at the lower prices offered by wireless carriers but typically don’t switch until they are out of the obligated contract periods for the current services.

Graph of Web Connection Speeds in the Workplace

Figure 3: Web Connection Speed Trends - Work Users (US)
Source: Nielsen//NetRatings
U.S. Internet Penetration Nearly 75%

     Nearly three out of four U.S. households with a phone line have access to the Internet, according to a February 2004 Nielsen//NetRatings survey. In the United States, 204.3 million people have access to the Internet, or 74.9 percent of the population. Internet access was 66% in February 2003, a nine-percentage point rise in one year.


For more information on these articles or to request maps for your system go to www.wirelessmapping.com.