Access to tax-exempt financing does not begin to explain the sizable rate differences between municipal and private cable providers. It explains only about one percentage point of the 20, 30, or 40 percentage points that private cable rates were above those of municipal systems.
More Minnesota Broadband News
The Minnesota Independent took Pawlenty's Administration to task last week for its decision to give more money to the telecom company front group Connected Nation. To be clear, this is not the money for infrastructure (yet - time will tell how the state encourages the feds to allocate the grants). This was the mapping money.
Peter Fleck, of PF Hyper blog, put it well:
“My understanding is that we have allowed the companies that have not provided the needed broadband coverage in our state to steer the broadband mapping process itself because of a stated need for confidentiality. That need is questionable,” said Fleck.
“And it puts the state in a position where if the maps show there is no problem with broadband coverage, then we won’t need legislation, regulation, or any other policies and it creates the risk that the telecom industry can continue to provide inadequate coverage to underserved areas — usually areas of low-density and low-income. And because of the inadequacy of these maps, eventually we will have to undertake broadband mapping again at taxpayer expense. To me, this is an irresponsible use of public money.”
The story also quotes me and links back to our story on Connected Nation in Minnesota.
I want to note that states and federal agencies can demand more in terms of better maps and data transparency. It is somewhat disingenuous to lay the blame solely at the doorstep of this telecom-front organization when elected officials refuse to demand more from an industry that has long retained legions of lobbyists. Make no mistake, Connected Nation's conflict of interest is a serious problem, but we need our elected officials to stand up to the telecommunications companies and demand better mapping data. We had higher hopes from the NTIA, but clearly that was misplaced.
More recently, Sharon Schmickle of MinnPost wrote about plans for a publicly owned network in Cook County, Minnesota. It touches on the major issues that many communities face when deciding whether to build their own network.
I wanted to add some comments to it that will add perspective to the story - I encourage you to read the whole Schmickle piece because I pick only a few points below to expand upon.
Regarding Cook County's application for broadband stimulus funds, the incumbent phone provider to much of the area (Qwest), has brought a we-won't-build-it and we-won't-let-you-build-it-either attitude. Local businesses and the Forest Service cannot even get a T-1 line (which would offer about 1.5 megabits and would probably cost $800/month give or take $500 depending on Qwest's mood at the time). The phone lines are in such a state of disrepair that dial-up is even slower than average and businesses can go days without any telecom services.
Dana MacKenzie, the information systems director for the County, previously told the MN Broadband Task Force that when the single connection to the area goes down (somewhere on the road to Duluth), all telecom stops up there. No redundancy means no credit card transactions, no 9-11 service, no nothing until the line is repaired. Profit-maximizing companies have little incentive to provide redundancy when residents have no real choice in providers.
Unfortunately, Jack Geller lets these companies too far off the hook. I find Geller, a member of the state's broadband task force, to be a deep-thinking person, so I hope this quote was out of context.
"Whether you agree or disagree with how good a job your incumbent providers are doing, you have to admit that they have invested millions of dollars in your community," Geller said. "Now we are saying we need more, and the government should provide it … should use taxpayer dollars to compete with the private sector."
These companies have not invested millions out of charity - they were originally granted a government-sponsored monopoly to ensure they would be profitable and they have continued to make profits while refusing to invest in better networks (here, I aim my criticism at the large, absentee companies - the smaller independent telcos that are rooted in their communities have continued investing in the community).
As for whether taxpayer dollars should compete with the beneficiaries of government-granted monopolies (though such monopolies ceased to exist, their legacy continues to shape our telecom landscape), I think the answer is muddier than he suggests. Further, most community networks emphatically do not use taxpayer dollars, so the argument is largely academic anyway. Jack and I have previously discussed the role of government competing with the private sector, but that is different from phrasing it as "taxpayer dollars" that are funding the networks - something almost guaranteed to result in a knee-jerk reaction opposing the idea (creating more heat than light rhetorically).
Finally, I think Jack's larger point would be that private companies cannot, even if they were willing, build out the networks that are needed in many rural areas. The costs are too high and returns too low. This is something I agree wholeheartedly on - which is why I find it ludicrous that some still think the private sector is capable of building this essential infrastructure throughout the country without continuing to damage our ability to compete with peer nations. And it remains frustrating that these companies, who will not build the needed networks, have the money and lobbyists to prevent others from doing it.
A final criticism of Shmickle's piece is that I was disappointed to see her treat the Monticello lawsuit as though it had any merit. It was thrown out by every court in Minnesota at the earliest opportunity - the only reason it lasted so long is because we have a massive backlog of cases and too few judges. It was a frivolous lawsuit meant to delay competition and it succeeded. It was an abuse of the justice system that has successfully scared other communities from exercising their legitimate power for fear of being locked in an expensive court battle (is there any other kind?) that would drain their resources despite an inevitable victory. Large companies like TDS have lawyers for this very reason - they probably profited from their court loss due to the delay of more than a year whereas Monticello had to hire representation to respond.
Photo by Jackanapes, used under creative commons license.