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Network Neutrality - Warnings From Radio Regulation

Many of us in the public interest telecommunications sphere are excited that the FCC appears poised to reclassify Internet access, which seems a necessary first step of protecting the open Internet.

Though we often focus on the false claims of the self-interested cable and telephone lobbyists when criticizing those who oppose FCC action on this, a recent Smithsonian Magazine article is a reminder that we must be vigilant with how the FCC uses this power. Clive Thompson penned "Air Waves" for the October, 2014, issue. It offers some context from the history of radio to discuss regulation of communication technologies.

When groups like the Electronic Frontier Foundation and other pro-open Internet groups question an enhanced FCC role in protecting the open Internet, they are often motivated by the somewhat terrible record of the FCC and its precursor in balancing the speech rights of everyone vs a motivated and self-interested for-profit industry.

In 1927 Congress created the Federal Radio Commission, endowed with the power to assign wavelengths. It began aggressively doing so, booting hundreds of small stations off the air, to produce “clear channels” for the big firms—wide-open zones where they could broadcast with no interference.

Amateur time was over, as the FRC explicitly warned in a memo: “There is not room in the broadcast band for every school of thought, religious, political, social, and economic, each to have its separate broadcasting station, its mouthpiece in the ether.”

Using modern technology, there can be no doubt there is room in the broadcast for every school of thought - but we certainly have to be vigilant to ensure no current or future government agency turns the Internet into the morass of broadcast radio today. This goes both for the ways over-commercialization and consolidation has killed interesting content and the ways the FCC strictly polices some forms of offensive content (the famous seven dirty words) while ignoring blatantly racist or homophobic content. My view: the FCC should stay far from content and let households do their own filtering as necessary.

Transcript: Community Broadband Bits Episode 63

Thanks to Jeff Hoel for providing the transcript for the Episode 63 of the Community Broadband Bits podcast with Jim Baller on second part of the History of Municipal Networks. Listen to this episode here.

 

00:06:

Jim Baller:  It is the code of omerta within the cable industry that you don't compete with an existing system.

00:14:

Lisa Gonzalez:  Hi there.  This is Lisa Gonzalez, from the Institute for Local Self-Reliance.  Welcome again to the Community Broadband Bits Podcast.  Large corporate providers enjoy lack of competition within the status quo.  Unfortunately, those same providers often refuse to build in communities without the potential for large enough profits, or where they would encounter competition.  What is a local community to do when existing providers see no reason to serve their community?  Several weeks ago, we brought you Jim Baller, President and Senior Principal of the Baller Herbst Law Group.  Baller Herbst has worked with local communities for years, as they have found ways to provide connectivity to residents, businesses, and government.  During episode 57, Jim and Chris discussed some of Jim's experiences with early legal battles, as publicly-owned networks began to pop up across the country.  This time, Jim and Chris continue to explore the history of publicly-owned networks.  As momentum builds, and more communities consider the pros and cons, past experiences can mold future decisions.  Here are Jim and Chris with more on the early days of the municipal network movement.

01:20:

Chris MItchell:  Welcome back to another episode of the Community Broadband Bits Podcast.  This is Chris Mitchell.  And once again I'm speaking with Jim Baller.  Jim, welcome back to the show.

01:30:

Jim Baller:  Thank you, Chris.  I'm happy to be here.

01:32:

Chris:  Last time, when you and I were speaking, we spent a lot of time talking about the early history of the municipal networks.  Some of the cable history, your work with Glasgow.  And we ended up by talking about the 2004 Nixon v. Missouri decision.  And I think today we're actually going to go back a little bit in time, to explain a little bit of what was happening in those years, while that case was working its way through the system.  So, why don't we pick one of the networks that you worked with early on -- perhaps the first fiber network you worked with -- and pick up the story there?

02:06:

Jim:  First, Chris, let me try to put into context the fiber networks that I began to work with, beginning in around 2000, 2001.  Up to that time, the great majority of the municipal networks were HFC -- hybrid fiber coaxial -- networks that were similar to the networks that cable systems -- private-sector cable systems -- were operating.  And also, a number of municipal networks did not provide residential service at that time.  And so, that's the kind of network that existed at the time.

Beginning around 2000, a number of very creative, pioneering communities saw the vision of developing fiber-to-the-home networks that would have substantially more capacity, and would reduce operating costs, and were, as the phrase -- saying was at the time, "future-proof."  Among these communities were Bristol, Virginia; and Kutztown, Pennsylvania; Grant County, Washington; Chelan County, Washington; Dalton, Georgia; was another early one.  And we worked with most of them -- in particular, Bristol, Chelan, Kutztown, and Dalton.  And these networks were very new in concept and they were pretty much all there was in this field of advanced fiber-to-the-home networks.  The major phone companies were not doing anything like that at the time.  They began to get into it about three, four years later.  The municipal projects encountered the usual opposition from the private-sector entities.  But they all went forward.  And they ended up being the spearheads for what is now a very widespread community of public and private entities that believe that fiber networks are the future of the nation, and, indeed, the future of many countries around the world.

04:56:

Chris:  Let's just jump right into Chelan, in part because when I was speaking with people from Bristol, they noted that they had gone out there to Chelan ...

05:05:

Jim:  Um hum.

05:05:

Chris:  ... when they were thinking about their system.  And also, Chelan's in a very interesting place.  Because, you know, most of these other places, they're -- they may be in rural areas, but it's a town center, and it's a -- you know, there's an area of density that they serve, or that they started to serve first.  Whereas Chelan is really quite spread out, and -- as is Grant, as I understand it.  And the public utility districts of Washington state, they're -- they cover these much larger areas, as I understand it.

05:32:

Jim:  That's quite correct.

05:32:

Chris:  So, how did Chelan become one of the first to experiment with this new technology?

05:41:

Jim:  Counties like Chelan, and Grant County, had revenues from selling electricity from their hydro projects on the great rivers of Washington, that they could use to support the development of broadband networks.  Their populations were not getting broadband of any kind.  And there was a logical connection of using communications services to improve the provision of electric power and also, at the same time, to give their residents access to a broadband service that they would not otherwise have had.  At the time that entities like Chelan and Grant County and other PUDs actually began to make plans to provide services over their networks, the state of Washington passed legislation that effectively limited the public PUD providers to providing service, if at all, only through wholesale means.  And that had a negative effect on their ability to serve the public well, and also their ability to provide a sustainable service.  They went ahead in any event, and their communities are much better for those efforts.

07:32:

Chris:  We saw this later, to the same effect, although not the same wording, in Utah, that -- There's justification by legislators, often, who are working at the behest of the cable and telephone companies, that they should limit the ability of these local government units, or local governments, depending on what we're talking about, as though it would somehow lower their risk, when, in fact, what we've seen time and time again is that when you decrease the freedom of the local government or public entity to pick its own business model -- the one that works best for its own unique situation and assets, that's when you're creating more risk for them.

08:12:

Jim:  The problem with this model of restricting public providers to providing wholesale service, as distinguished from retail service -- there are several problems, but the main one is that, if you are dealing directly with your own customers, you are responsible for the quality of service, the pricing of service, the way in which the customers are able to respond when they have problems, and so on and so forth.  What the wholesale model essentially does is inject between that relationship -- between the consumers and the utility -- a whole layer of middlemen, or middlepersons, or --  And that layer of retailers has the incentive to gain the same kinds of profits that incumbents have.  They push prices.  Their interests are not necessarily the same as the network owners.  Because the network owner, if it's a utility in particular, has decades of building a reputation for high-quality customer service, and high quality of service.  If the retailers don't meet those standards, the utility still gets blamed for it, but there's not much they can do about it.  Retailers, in our experience, have tended to be very conservative about spending money for marketing, and for customer service and support, which has a negative effect, from the perspective of the network owner.  And it's a difficult model, especially since there aren't that many high-quality retailers who are available in many of the rural areas where we're talking about PUDs serving.  So, bottom line, where municipalities have been able to provide retail service, they tend to have done very well.  Where they've been forced to operate a wholesale operation without being able to serve customers directly, they've, in many cases, struggled.  That's a difficult model.

10:55:

Chris:  Bristol, Virginia, was thinking about what it could do to try and revitalize the economy in southwestern Virginia.

11:02:

Jim:  When Bristol got going, they wanted to do a wholesale model.  Their problem, as far as the model was concerned, was something different.  They couldn't get a cable operator to work on their network as a partner, because there were already, actually, two private-sector cable systems serving portions of the city: Comcast and Charter.  And it is the code of omerta within the cable industry that you don't compete with an existing system.  And so they couldn't get a cable operator to operate over the network.  And they had a -- what they thought was a deal with a private phone company to operate over the system, so that they could focus on broadband and providing infrastructure to the cable and phone providers.  And that didn't work out either.  So Bristol was faced with a choice of either abandoning their desire to be a wholesale provider or abandoning the concept of providing a fiber service in their community.  And they decided that the only real alternative left to them was to step up and become a retail provider themselves.

12:25:

Chris:  Right.  And we -- you and I -- told that story.  You provided a lot of advice in the writing of a case study that I did, on Bristol, Lafayette, and Chattanooga.  I wanted to just sort of say that BVU holds claim, and likes to brand itself as the very first municipal triple-play network available in the United States.  And, although that is true -- although they weren't the first sort of municipal fiber network.  And we skipped over Kutztown a little bit.  Which has a little personal history for me.  My mom was born there.  I visited there a few times.  Let's talk about Kutztown, and how they came into building a fiber network.

13:10:

Jim:  They're a small college town in central Pennsylvania.  They have, I believe, a population of only around 5,000, not including the college campus and the students there.  But, you're right, they did put together a fiber-to-the-home network.  And, you know, you often hear that it's public versus private.  And that's not true at all.  And it certainly isn't true in Kutztown's case.  We once provided testimony for a committee of Congress on how the Kutztown network operated.  And it had, as it turns out, a half a dozen private providers filling out the service list on that network.  And there were providers, for example, providing local phone service.  And some were providing long-distance phone service.  Kutztown was providing broadband and cable.  Others were providing a security service.  And so you had this isolated little community in the heart of Pennsylvania out there showing up what everyone else in Pennsylvania was doing.  And, as it turns out, Kutztown was a sore point with Verizon, and it led to two or three years of efforts by Verizon to obtain legislation in Pennsylvania to prevent future Kutztowns.  And that ultimately resulted in Verizon pushing through the legislation at the end of 2004.  That spawned its own history of national opposition to barriers to entry, which I think we'll probably get to at some point down the road.

15:25:

Chris:  You know, when I was looking at some of the history of Kutztown, I found this fascinating fact -- and I don't remember the exact amount of time -- but the governor of Pennsylvania at the time presented Kutztown with an award ...

15:41:

Jim:  Um hum.

15:41:

Chris:  ... recognizing their local government excellence in this telecommunication investment, you know, building this futuristic network.  And the same governor turned around, a few months later -- I think it may have been as many as six or nine months later -- and he signed the bill to make sure that no one else could ever do that in Pennsylvania.  It was a fairly fascinating turnaround.  It really shows the power of a company like Verizon.

16:05:

Jim:  Yes, it does.  And that is a very unfortunate experience.  I remember the morning after we lost that fight in Pennsylvania, turning to my partners in Washington and saying, mark my words, this loss is going to be the equivalent of the sinking of the Lusitania, which ultimately led to America's entry into World War I.  And, as it turns out, that is in fact what happened.

16:35:

Chris:  It's a great point to end this show on.  And what we'll do is, we're going to come back, and we'll keep this history moving forward.

16:44:

Jim:  OK.  Let's do it.

16:45:

Lisa:  You can access a wealth of information about the Baller Herbst Law Firm at baller.com . We have one more future interview with Jim lined up.  So be sure to return to hear Jim share some of his rich experiences.  Thanks again for listening to the Broadband Bits Podcast.  If there are issues related to telecommunications that interest you, we welcome your suggestions for future shows.  E-mail us at podcast@muninetworks.org .  You can also follow us on Twitter.  Our handle is @communitynets .  We released this show on September 10th, 2013.  Thank you again to the group Break the Bans for their song, titled "Escape," and licensed using Creative Commons.  Thank you for listening.

The Birth of Community Broadband - Video

ILSR is excited to announce a new short video examining an impressive municipal broadband network, Glasgow Kentucky. Glasgow was the first municipal broadband network and indeed, seems to have been the first citywide broadband system in the United States.

We partnered with the Media Working Group to produce this short documentary and we have the material to do much more, thanks to the hard work of Fred Johnson at MWG and the cooperation of many in Glasgow, particularly Billy Ray.

People who only recently became aware of the idea of community owned networks may not be familiar with Billy Ray, but it was he and Jim Baller throughout the 90's and early 2000's that paved the way for all the investment and excitement we see today. 

I'm excited to be helping to tell part of this story and look forward to being able to tell more of it.

Video: 

Michael Powell said What?? Why Everyone Should Ignore the Cable Lobby

Stop and think for a second. Would you regard the electricity grid and water system as an abysmal failure or success? If you are lobbying for cable companies in DC, you apparently think they are monumental failures.

Michael Powell, former Chairman of the FCC must be dizzy after his trip through the revolving door on his way to heading the national cable lobbying association. From his remarks at their cable show [pdf]:

It is the Internet’s essential nature that fuels a very heated policy debate that the network cannot be left in private hands and should instead be regulated as a public utility, following the example of the interstate highway system, the electric grid and drinking water. The intuitive appeal of this argument is understandable, but the potholes visible through your windshield, the shiver you feel in a cold house after a snowstorm knocks out the power, and the water main breaks along your commute should restrain one from embracing the illusory virtues of public utility regulation.

Pause for a second and think of the last time your water rate went up. Think of what you were paying 10 years ago for water and what you pay now. Compare that to anything you get from a cable company.

His point seems to be that because more regulated utilities like water and electricity are not PERFECT, regulation has failed and we should just let the private sector handle that. Well, some communities have privatized their water systems and the results have been disastrous - see a company called American Water in David Cay Johnston's book The Fine Print and also explored here.

Let's imagine if electricity was not tightly regulated and the market set the rates. How much would you pay for illumination at night? A refrigerator? Probably 10 times what you do now if that was your only option. Maybe 100 times after a few Minnesota winter nights. Market-based pricing for electricity would at least encourage conservation and efficiency, I'll give it that.

Public utility regulation is far from perfect but the alternative is far scarier. There is no "market" for these services over the long term. There is monopoly. And unregulated monopoly means Wall Street sucking the resources out of Main Street - and using some of them to employ former regulators as chief lobbyists who argue that regulation doesn't work.

I'm not convinced that Tom Wheeler is the disaster that some are now claiming he is, but it is long past time that top regulators are chosen from among major donors and fund raisers from the winning presidential candidate. Frankly, Wheeler is a helluva lot better than the last guy and we could have done a lot worse.

We need to change the system, but in the meantime, no one should be listening to any fool that claims our electrical or water systems would be better off with less regulation. After all, it isn't that long since we tried it. Enron, remember?

Communities that wisely don't want to put their trust either in DC regulators or a few massive corporations that care only to meet Wall Streeet's desires should choose to be locally self-reliant. Build your own network and take charge of your future.

History of the Quickly Subverted 1996 Telecommunications Act - Community Broadband Bits Episode 89

If all had gone according to the plan behind the 1996 Telecommunications Act, we would have lots of competition among Internet service providers, not just cable and DSL but other technologies as well. Alas, the competing technologies never really appeared and various incarnations of the FCC effectively gutted the common carriage requirements at the heart of the Act.

Earl Comstock joins us today to explain what they had in mind when they spent years developing the goals and text of the Act. A staffer to Senator Stevens - and yes, we discuss the legacy of Senator "series of tubes" Stevens and you might be surprised when you learn more about him - Earl helped to craft the Act and then had to watch as the FCC and Courts misinterpreted it.

At the heart of our conversation is what they believed would be necessary to achieve the goals of expanding access to telecommunications service to all.

Read the transcript from our conversation here.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

This show is 30 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Thanks to Valley Lodge for the music, licensed using Creative Commons. The song is "Sweet Elizabeth."

The Real Threats from Monopoly - Community Broadband Bits Podcast #83

When we think about the threat of monopoly, we almost always focus on how monopolies can raise prices beyond what is reasonable. But there are many threats from monopolies and many are much more dangerous to a free society than higher prices. This week, monopoly expert Barry Lynn joins us for the Community Broadband Bits podcast.

Lynn is a senior fellow at the New America Foundation and author of a book that I recommend very highly - Cornered: The New Monopoly Capitalism and the Economics of Destruction. Buy it a local bookstore or from an independent bookstore online.

We discuss whether companies like Comcast are correctly termed "monopoly" when they face some nominal competition and what the threat from monopoly is. Barry explains how both political parties have encouraged centralization even as both parties have had vocal opponents of such policies. And finally, we discuss how policies dealing with monopoly now are fundamentally different than they were for the vast majority of American history.

This is a great discussion - one of the most important we have done. You can read a transcript of our discussion here.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

This show is 20 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Thanks to Haggard Beat for the music, licensed using Creative Commons.

Billy Ray on the Origins of the First Muni Broadband Network: Community Broadband Bits Episode #74

Last month, we unveiled a video teaser of our interviews in Glasgow, Kentucky over the summer regarding its municipal broadband network. This week our podcast features a few clips from those interviews with Billy Ray, the Superintendent of Glasgow's Electric Plant Board.

He offers more context on the history of their network, including how they became "savvy marketers" when faced with stiff competition from Telescripts - a cable company that cared nothing for Glasgow until they dared to build a rival system operated for community benefit.

He details how they began producing local content and the surprisingly most popular show they developed - what would eventually come to be known as "reality TV."

We thank Media Working Group, our partners in this documentary for the high quality interviews.

Read the transcript from this episode here.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

This show is 10 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Thanks to Haggard Beat for the music, licensed using Creative Commons.

Billy Ray on the Origins of the First Muni Broadband Network

During the summer, I spent two days in Glasgow, Kentucky, to learn about the first municipal broadband network in the country. I believe it also became the first community in the US to have broadband access available universally within the town.

Working with the Media Working Group, we recorded several interviews with people there, including a lot of time with Electric Power Board Superintendent Billy Ray. Billy Ray has been a key proponent of local self-reliance and a pioneeer of community owned networks.

Below, we pulled out a few snippets of our interview talking about the origins of the Glasgow network. All of our stories about Glasgow are available here.

Video: 

Jim Baller Returns for Vol 3 of Muni Network History - Community Broadband Bits Episode #67

We are excited to continue our history series with Jim Baller of the Baller Herbst Law Firm. This is Jim's third time on the program, having joined us for Episode 57 and Episode 63.

We continue our discussion with a recap of the events of 2004, including Jim's work with Lafayette to find a compromise to the ALEC bill that would have effectively banned municipal networks in Louisiana and the Verizon-led campaign to prevent Pennsylvania communities from following the muni fiber path of Kutztown.

We discuss several of the state battles over the years and the near passage of the Community Broadband Act by the U.S. Congress. Also, how some of the big telecom carriers started to invest in FTTH after the model was proved by community networks. We'll have Jim back for future shows as we continue charting the history of community owned networks.

Read the transcript of our conversation here.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

This show is 23 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Thanks to Break the Bans for the music, licensed using Creative Commons.

Crap Cable Threatens Cloud Services

For my money, the best headline of last week was "The U.S.'s crap infrastructure threatens the cloud." The rant goes on to explain just how crummy our access to the Internet is.

As a patriotic American, I find the current political atmosphere where telecom lobbyists set the agenda to be a nightmare. All over the world, high-end fiber is being deployed while powerful monopolies in the United States work to prevent it from coming here. Some of those monopolies are even drafting "model legislation" to protect themselves from both community broadband and commercial competition.

He nails a number of important points, including the absurdity of allowing de facto monopolies to write the legislation that governs them. However, Andew Oliver's article is a bit muddled on the issue of "monopoly." I have argued with several people that the term "monopoly" has historically meant firms with large market power, not the more stringent definition of "the only seller" of a good. It is not clear how Oliver is using the term.

Because of this confusion, you can come away from his piece with the firm idea that it is primarily government's fault we have a duopoly of crap DSL and less crappy cable. He repeatedly says "state-sponsored monopolies." However, no local or state government may offer exclusive franchises for cable or telecom services and the federal government hasn't officially backed monopolies for decades.

This is a key point that many still fail to understand - a majority seem to believe that local governments bless monopolies when local governments actually are desperate for more choices. This is why they fall all over themselves to beg Google to invest in their community or they build they own networks (over 400 communities have wired telecom networks that offer services to some local businesses and/or residents).

Poor laws and regulations have helped the massive cable and telephone companies to maintain their status - that is why they spend so much on lobbying and political contributions at all levels of government. They want to and have successfully corrupted the process, neutralizing the power of government to protect consumer interests and prevent a few firms from dominating the market.

wall-street.jpg

What is missing from the conversation is Wall Street's role. Wall Street abhors competition, particularly for something as essential as Internet access because rigorous competition drives down profit margins. Wall Street puts a massive premium on consolidation and preventing competition. It wants a few firms to control this market so they can regularly increase fees and increase shareholder value (at the expense of the rest of our economy).

It isn't JUST federal and state government policy that is rewarding the duopoly, there are a host of reinforcing factors. And while government did indeed establish monopoly for the phone system 100 years ago, it resulted in a fantastic universal service network - so those who might argue a government sanctioned monopoly was never a good idea have a high burden to prove it.

As to how we have moved from a monopoly service model to having choices... well, lobbyists have been paid a lot specifically to mangle that process to benefit a few corporations. Our government has been corrupted and we have to live with the effects every day. But even without government, we would almost certainly we stuck with a monopoly, perhaps even worse as we would lack the few consumer protections we still have.

I was heartened to see the Obama Administration block the AT&T - T-Mobile merger as it suggests that there is a spark of hope for antitrust rules to prevent further consolidation. Stopping consolidation is the first step to having real choices because massive corporations amass not just economy of scale advantages over rivals, but find it much easier to influence the rules in their favor and to disadvantage competitors.

Returning to a fact from Oliver's article, he pays $1500/month for 30 Mbps symmetrical fiber. If he lived in Monticello, he would pay $100/month for that business connection. Community owned fiber is not merely about the technology, it includes numerous other benefits including radically lower prices that help local businesses to succeed.

Photo courtesy of JSquish via Wikipedia Commons