comcast

Evidently, the Comcast-provided I-Net in Norton - a city of nearly 20,000 west of the Cape - suffers frequent outages, outraging those who depend on it. The City has decided to build their own network (after originally hoping Verizon would fund it) to connect town offices, public safety, and school sites with fiber-optic cables.

Norton predicts significant savings from the new network - just as do hundreds of other cities that are building their own I-Nets to cut costs and dramatically improve services and reliability.

The projected costs are $116,000, according to this article.

Town Manager James Purcell said the main infrastructure that will be installed will be the beginning, and likened the expenditure to paying for the installation of a major sewer line with stubs to various buildings.

My friend, Geoff Daily at App-Rising.com, has questioned the wisdom of running fiber to all anchor institutions.

There's been a lot of buzz around the benefits and relative viability of wiring all community anchor institutions (schools, libraries, hospitals, etc.) with fiber as the way to get the best bang for the broadband buck. But recent conversations with my fiber-deploying friends have led me to worry that doing this could be a big mistake.

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The reason is simple: if you build a network to serve community anchors, then those institutions won't be available to serve as anchor customers for a community-wide deployment. Without those community anchors as customers, the economics of deployment, especially in rural areas, becomes much harder and may actually make robust, sustainable broadband impossible in some areas.

This is a question I have wrestled with also, in trying to help communities understand the real impacts of decisions they make on whether to build their own broadband network.

My first reaction is on philosophical grounds - public institutions like schools, police departments, etc., do not exist to prop-up the business models of cable or telephone companies. Large entities like municipal and county governments should own their own network because it will save them money and expand their capabilities. When will the tea-party protesters start protesting government paying exorbitant fees to telephone companies for slow T-1 lines and the like? After all, these are our tax dollars and they should be spent wisely.

My second reaction is that I seriously doubt removing these institutional networks will impact the business model significantly. Maybe it would have last decade, but now we know that Comcast and probably many more have ">massive margins in their broadband operations. Losing the libraries and schools will do little to their bottom lines. Even if it takes a bit out of their profits, they won't go missing meals.

But really, the answer is more complicated. Many municipalities already get "free" services from their cable company as a part of the video franchise. To gain access to the right-of-way, cable companies have often given "free" (meaning paid for by the subscriber base) services via an I-Net. Though this has been helpful for communities it was never a particularly fair, efficient, or rational means of solving connectivity issues for local governments.

It wasn't fair because cable subscribers paid for the costs of local government that should be paid by all citizens. It wasn't efficient because cable companies often did not live up their responsibilities or franchises did not require modernization of networks over the many years of the agreement. And it wasn't rational because neither entity had an incentive to build the kind of network local governments need to do their jobs effectively.

But the right-of-way is a valuable asset and communities should have the freedom to negotiate access to it as they choose. Those choices are also constrained by what state and federal laws allow (I said this was complicated, right?)

So - getting back to the question of whether building fiber to these public buildings is a good idea or not, I say it absolutely is ... if it is locally owned and the local community is responsible for it.

In the unlikely event that such a network causes private companies to cease investing in the community (though continue refusing to invest in the community is likely a more accurate description), the community should take initiative to build the last-mile networks necessary for future vitality.

Either this is an essential infrastructure or it isn't. If it is, local governments must take a stronger role in ensuring everyone has access. If it isn't essential, then we can continue watching private companies deploy networks wherever they decide it is profitable.

Update: In an attempt to be more clear, I will say that I think federal policy should make it a priority to make funding available (loans where possible, mixing in grants where absolutely necessary) so that local communities can connect their anchors. Local ownership is paramount. Statewide networks are a poor approach in that it would de facto prevent communities from building their own networks.

I don't think these networks will interfere with business plans of those private companies who have already made investments - but I also don't think this should be a major concern because local government's mission is to serve the needs of the community, not those of absentee-owned cable or telephone companies. To the extent that people in the community need better networks, local government must be ready to step in -- just as they do with roads, water treatment plants, and other elements of infrastructure.

As I noted previously, a community in Colorado - Longmont - will soon vote on whether the local government should be allowed to sell retail Internet services. This community has tried a number of approaches to expanding broadband competition but have not yet succeeded in getting the networks they need.

The local paper opposes the measure. However, the editorial frames the issue in a curious way. It claims the ballot measure will "override" state law, which is utterly false. State law says the community has to approve it before they can do it - so the City is complying with the state law.

Those against the measure point to failed municipal-run telecommunication efforts as another reason not to support this measure. That’s fairly compelling, especially when we have no specifics about what type of telecommunications projects the city will pursue.

Those against the measure claim that municipal-run telecommunications efforts have failed. They often point at successful community networks (or even failed privately owned networks, oddly enough), call them failures, and rightly assume that no one will fact-check the assertions. Often, they will gin up some false numbers that suggest a far-off network has lost a lot of money (using their same methodology, it would be crazy for anyone to borrow to buy a house).

Regarding the concern over what specific project the city will pursue if authorized, this is an interesting catch-22 because it makes little sense to expend a lot of money on a business plan before a community has the authority to build something. Either decision is difficult and requires a trust in the local leadership and democratic process.

Comments to that editorial rightly note that Comcast and Qwest will not prioritize investments in Longmont until they see competition. The private sector has failed to generate competition on its own, so the community is smart to consider spurring competition themselves. However, both Comcast and Qwest can spend hundreds of thousands of dollars to scare people into voting against competition - it will still be cheaper for the incumbents than having to actually invest in faster networks.

One of the comments provides some interesting background on local broadband:

The Longmont Fiber ring was built by now-defunct Adesta Communications. The City wisely included language in the right-of-way contracts that gave them the right to the fiber if it was abandoned. Currently there is 12% usage and lots of opportunity for the City to resell strands and collect revenues. They aren’t looking to provide IPTV, just access and need [Ballot Question] 2C passed in order to do this. Also, Longmont has been working diligently to keep bandwidth flowing through the DHB wi-fi network and keep the customers online. 2C will give them the authority to salvage the network and get it running in top condition again.

Craig Settles recently wrote a piece looking at Longmont, specifically the role of companies like Comcast who fund groups to spread FUD (fear, uncertainty, and doubt) that is very hard for local governments and truly grassroots organizations to respond effectively to. They are overwhelmed by being outfunded -- sometimes 25:1.

However, communities that move forward overwhelmingly see success - see Craig's story for a few profiles or read the reports that we showcase (particularly the Municipal & Utility Fiber Optics Guidebook and Muni Broadband Policy Brief).

As citizens in Longmont consider their options, I hope they are able to see past the self-interested Comcast and Qwest lies claiming that community-owned networks are doomed. The communities that have failed are those who remain dependent on absentee-companies that put profits above community needs.

On Tuesday, September 15, EPB, the public power utility serving Chattanooga and nearby communities in Tennessee, rolled out fully fiber-powered triple-play services to 17,000, a number expected to grow by July 2010, when services will be available to some 100,000 people and businesses. It will take three years before all 160,000 potential subscribers are passed.

Chattanooga has had a relatively rough time creating the network due to the litigious nature of its incumbents, who have filed 4 lawsuits to stop the project only to have each of them dismissed by the courts. (This is a predictable outcome, many of these companies file frivolous lawsuits to intimidate communities with lost time and legal fees - leading to a no-lose situation for companies that invest more in lawyers than in the networks communities need in the modern economy.)

The Tennessee Cable and Telecommunications Association kicked off the lawsuits in 2007 and Comcast chimed in a year later. As has been done in other communities, the private companies alleged the power utility was cross-subsidizing its triple-play telecom offering with revenues from the electric side. Aside from this just being a poor business practice, the companies say such cross-subsidization would be unfair to them even as major carriers routinely cross-subsidize from community to community - overcharging in non-competitive markets to make up for keeping prices low in competitive markets.

Nonetheless, public power companies and other public agencies have learned to keep meticulous books to show they are not cross-subsidizing, something courts recognize each time their time is wasted by lawsuit-happy incumbent providers.

EPB has long offered some telecom services. Starting nearly 10 years ago, the power utility stepped up to ensure businesses had access to the telephone and broadband networks they needed. Those services clearly scratched an itch as they had more than 2,300 customers before beginning to expand the network to everyone.

EPB's footprint includes over 168,000 electrical customers scattered over 600 sq. miles that reach into northern Georgia. As the fiber network expands to cover the full territory, it will quickly become the largest publicly owned fiber network in the country - making Chattanooga the envy of larger cities. A recent article in Business TN made just this point:

Josiah Roe of Medium, formerly Coptix, a Web graphic design company, cites the ability to upload and transfer large files with the "comprehensibly better product" as an advantage for his company. "When I go to Chicago or larger cities and they hear we have [FTTH], they're just amazed to see a city of our size doing something like that," Roe says. He adds that, "Chattanooga is very progressive and forward-thinking" in its fiber initiative.

One of the reasons publicly owned fiber networks are commonly built by public power companies is because power companies already need fiber to reliably transmit data in real-time to monitor many areas of the grid. This fiber network will be used extensively for electrical uses, which is why the electricity side of EPB is paying for $160 million of the $220 million expected expense. EPB has applied for $111 million from a Department of Energy smart-grid stimulus grant.

Though many utilities are turning to wireless for smart-grid data transmittal, EPB fears its topology will interfere with long-range wireless solutions. Fiber is considerably more reliable, but the upfront costs are indeed higher. EPB is not actually running fiber to every home for smart-grid applications, just those who are taking telecommunications services. Those who do not take telecom services will have an electric meter wirelessly connect to a mesh network that uses a nearby fiber-connected home to send and receive usage data.

Some have claimed the electrical side of EPB should pay less for the fiber network but the Electric Power Research Institute (EPRI) has validated the EPB numbers. Additionally, people in the smart-grid pilot project are already seeing benefits. From that article:

EPB hopes to recoup its investment primarily from not having to continue to manually read its 160,000 meters, cutting the theft of power from altered older-design meters and generating extra revenues from new video and telecommunications services made possible by the fiber-optic network.

Over the next 3 years, EPB expects to sign up at least 35% of its footprint for its telephone, Internet, or television services. Comcast has made now Chattanooga a priority for investment, offering its "up to" 50Mbps down cable network (often paired with a paltry 5Mbps upstream connection). As usual Comcast will advertise its "introductory" rates that increase dramatically after a set period of time; I have yet to find a publicly owned network that uses such annoying gimmicks.

Katie Espeseth, vice President of EPB Fiber Optics, explained why:

“We’re entering the market with a consistent and clear price — it is not a temporary, promotional price,” Ms. Espeseth said. “Because of our fiber-optic infrastructure, our picture quality is clearer and more consistent and our ‘Fi-speed’ Internet service is consistent and more reliable.”

They offer the handiest package picker I have ever seen from a service provider (though I confess I am not an expert in that). It shows you all the different options and lets you customize your bundle, constantly updating the price. Like other publicly owned networks, EPB wants to offer as much local content as possible. Compare this to major cable companies, that often refuse to live up to their franchise requirements and must occasionally be sued to meet their obligations. EPB is actively looking for local content to put on the television, including things like youth sports that they will put on video-on-demand.

From what I can tell from afar, it looks like EPB is pursuing a strategy of "upping the ante." Rather than try to beat Comcast just on prices, they are offering faster services at existing prices (not necessarily the "intro" pricing used by many carriers to hide the actual cost of services). Note that the slowest broadband connection is 15Mbps/15Mbps - speeds that are faster than the best speeds in most communities around the country. EPB is offering services that will ensure any subscriber can use multiple modern applications simultaneously - an increasingly common need as households continue getting more bandwidth-hungry devices.

Chattanooga's network is exciting and looks to be a great investment for the community. Community Networks generally have no problem of signing up 20% in the first year or two, so getting to 35% in three years should not be difficult. In the meantime, the network is already creating jobs. EPB has hired 70 full-time installers and more temporary workers in order to add 100 subscribers a day to the network.

Espeseth has estimated 2,600 new jobs will be created in the greater Chattanooga area from the fiber network and resulting economic development. Another article puts a number on the projected economic development, expecting "almost $850 million in value from both communications and smart grid services, including things like jobs and energy savings."