Local governments do not favor themselves on taxes or right of ways or otherwise compete unfairly with incumbent telecommunications and incumbent cable companies. To the contrary, private incumbents enjoy a wealth of state and federal subsidies, guaranteed rates of return, regulated rates for pole attachments, etc. In addition, local telephone companies enjoyed years of regulated monopoly status to build positions of dominance they continue to enjoy. To pretend that these local incumbents, with their subsidies and regulated access, need to “level the playing field” to protect a “free market” against local government systems flies in the face of reality.
Wilson's Greenlight Ahead of Schedule, Deals with TWC Predatory Pricing
Wilson's Greenlight community fiber network is ahead of schedule. They continue to operate ahead of the business plan, despite a few difficulties that offer lessons to up and coming community networks.
We recently covered the fallout from their application to the broadband stimulus program where they had to disclose network information to their competitors.
Fortunately, that was not the only news last month from North Carolina's first all-fiber citywide network. They also surpassed 5000 subscribers and remain 6-9 months ahead of their business plan in take rate, according to the Wilson Times.
The number of customers is expected to reach 5,300 by the end of the fiscal year if the current trend continues, according to Dathan Shows, assistant city manager for Broadband and Technical Services. The city's current business plan calls for Greenlight to reach 5,000 customers by the end of the third full year of operation, which will be June 2011.
This is not the first time the network has exceeded projections; the network was built faster than expected and quickly jumped out ahead of take rate expectations.
One of the reasons Greenlight may be growing is its attention to local needs, as illustrated by the network finding a way to televise local football matches that otherwise would not have been available.
However, the Wilson Times story goes into much greater detail regarding the competition from Time Warner Cable. As we regularly see, Time Warner Cable is engaging in what appears to be predatory pricing to retain customers and starve Greenlight of new subscribers.
A lesson to other community networks, Wilson is documenting the deals TWC uses to keep subscribers. All communities should keep these records.
"Time Warner Cable's market tactics include anti-competitive pricing that interferes with Wilson's ability to secure customers through normal marketing," the application [for broadband stimulus] states. "TWC offers below-market rates to customers seeking to switch to Greenlight, locking them into multi-year deals in exchange for name-your-price rates that are not advertised and made on an ad hoc basis when customers call to switch to Greenlight."
Running the numbers of these discounts leads to a total community savings of over $1million a year that subscribers to Time Warner Cable are saving over what they would be paying in absence of a community network.
The article goes on to quote Catharine Rice, someone who has a very strong grasp on the reality of broadband in communities across the country.
Rice describes what Time Warner Cable is doing as "cross-subsidizing" and charging higher rates elsewhere so it can offer lower rates in Wilson. Rice said Time Warner Cable is keeping pricing below cost in Wilson to try to drive Greenlight out of business.
"Somebody has to start looking at what Time Warner is doing in Wilson," Rice said. "When I step back and look at this whole thing, it's clear as a bell what's going on. Time Warner doesn't want to upgrade its cable plant."
Let's take a look at the broadband Time Warner Cable offers and compare it to Greenlight. All speeds in Mbps. Time Warner Cable does not make it easy to understand what the upstream speeds are, so I tried to piece it together from a variety of sources.
TWC has much slower options, from a .768/.384 package up to a "turbo" 15/1 (for $56.90). Wilson offers only one internet-only package - a 20/20 connection for $59.95. If bundling, Wilson has 5 packages from 10/10 at $34.95/month to 100/100 for $300/month.
It should be noted that the 15Mbps down TWC offer is faster that what TWC offers in nearby communities, suggesting they either upgraded their Wilson plant slightly or they are just being more bold in exaggerating their services. Either way, I'm willing to bet that the actual TWC "up to" 15 Mbps is slower than the 10Mbps service from Greenlight.
It is hard to compare TWC to Greenlight, much like comparing a Vespa to a Ducati. Nonetheless, TWC's size and market power allow it to try to run competition out of the market.
Finishing up, another lesson to communities who are planning to build their own next-generation network: be aware that you will have to deal with people who do not pay their bills. Wilson has had to deal with what seems to be an abnormally high number of these:
To date, Greenlight has disconnected just over 1,000 customers due to nonpayment. Shows said these are customers who received Greenlight service but never paid a bill. As a result, the city has had to "tighten standards," Shows said, on deposits. How much a customer pays for a deposit is based on their credit rating and on the services to which they subscribe. The city's finance department handles collections for Greenlight.