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Community Networks Provide Cable/Broadband Competition That is Otherwise Unlikely

Tue, July 12, 2011 | Posted by christopher

You can also read this story over at the Huffington Post.

How can it be that the big companies who deliver some of the most important services in our modern lives (access to the Internet, television) rank at the top of the most hated? Probably because when they screw up or increase prices year after year, we have no choice but sticking with them. Most of us have no better options.

But why do we have so few choices? Government-sanctioned monopolies have been outlawed since the 1996 Telecommunications Act. Unfortunately, the natural tendency of the telecommunications industry is toward consolidation and monopoly (or duopoly). In the face of this reality, the federal government has done little to protect citizens and small businesses from telecom market failings.

But local governments have stepped up and built incredible next-generation networks that are accountable to the community. These communities have faster speeds (at lower prices) than the vast majority of us.

Most of these communities would absolutely prefer for the private sector to build the necessary networks and offer real competition, but the economics of telecom makes that as likely as donuts becoming part of a healthy breakfast. In most cases, the incumbent cable and telephone companies are too entrenched for any other company to overbuild them. But communities do not have the same pressures to make a short-term profit. They can take many years to break even on an investment that creates many indirect benefits along the way.

One might expect successful companies like AT&T and Time Warner Cable to step up to the challenge posed by community networks, and they have. Not by simply investing more and competing for customers, but by using their comparative advantage – lobbying state legislatures to outlaw the competition. As we noted in our commentary and video last week, massive cable and telephone companies have tried to remove local authority to build networks.

These companies frequently claim they are at an unfair disadvantage when they have to compete against a broadband network owned by the local government. This claim resonates strongly with some politicians, particularly those who happen to receive a lot of campaign contributions from big telco and cable companies -- as recently demonstrated in Wisconsin. They say they just want a "level playing field."

We decided to take a deeper look. We compared Time Warner Cable to Salisbury, North Carolina -- which built one of the newest community fiber networks – to see who is at a disadvantage.

TWC v Salisbury Fibrant InfoGraphic

Big companies like Time Warner Cable have some big advantages over any community that decides to build a network. Of course, communities do not build their own networks on a lark, they do it because they need fast, affordable, and reliable networks for economic development and maintaining a high quality of life.
But a better comparison goes beyond simply the scale of the competitors in order to complete a more meaningful comparison. For that, we created our “Level Playing Field” video, attached below.

There should be no doubt that massive incumbent cable and phone companies have a monopoly on the “unfair” advantages in telecommunications. Fortunately, community networks have a host of local advantages and often superior technology with which to invest in the networks they need. The question is whether Congress and the states will protect the right of communities to choose for themselves if a local community network is necessary.

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Lessig Promotes Publicly Owned Broadband at Personal Democracy Forum

Fri, July 08, 2011 | Posted by christopher

I have long been a fan of Larry Lessig's work, so I was proud to see him use our work as the foundation for his presentation at the 2011 Personal Democracy Forum.  He talks about the fundamental right of communities to build their own networks as well as Time Warner Cable's successful purchase of competition-limiting legislation in North Carolina.

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Understanding User Fees and the Community's Right-of-Way

Thu, July 07, 2011 | Posted by christopher

A friend once told me about his battle with the local government over whether it would charge him a fee for inspecting the house he wanted to begin renting out (he had bought another house but didn't want to sell the first in a down market). His house was well maintained and he said he would be happy to schedule the inspection whenever convenient for the City but absolutely would not pay a fee so they could inspect his house.

Consider this from a different perspective. The local government should make sure that rental properties meet certain standards (building and fire codes if nothing else). This means inspections. Who should pay for the inspections? It boils down to two choices: the property owner or the tax-base at large. It seems more fair to charge property owners at least a portion of the cost as they benefit the most from being able to rent out their property.

I make this point to lead into another discussion about managing the Right-of-Way (ROW), the city-owned property used for utilities. An article in TribLive about a town near Pittsburgh fighting to keep its cable fees offers insight into a national discussion about fees for using the ROW.

Hempfield charges utilities $750 for a right-of-way permit, $500 for a renewal, and $250 for a construction permit, according to a township ordinance.

Ferguson said without the fees, the township would not be able to monitor the work.

"We use the monies, those permit fees, to pay staff to make sure they repair roads as they're supposed to," Ferguson said. "Part of the fee is ... for our inspectors to go out and make sure they (utilities) complete the job right."

Ferguson said utility companies sometimes dig up new roads to install or repair lines and leave the road in shambles afterward.

"Taxpayers should not be required to pay the staff to make sure utility companies do the right thing," he said.

FCC Logo

Telecommunications providers have long claimed that local government fees are unreasonable and getting the necessary permits is too difficult. But when asked to document such claims, they rarely do. The FCC is currently examining whether it believes the fees charged by local governments are fair.

While we believe it would be counter-productive for local governments to make it too difficult to access the ROW, we simply have seen very little evidence that it is a common practice. What we do see is a history of massive companies like AT&T using their vast lobbying power to limit local authority in ways that transfer costs from companies like AT&T to the community to benefit AT&T's shareholders.

The next interesting question will be what the FCC does about it. It will be hard to watch the FCC, which believes it does not have the power to protect local authority against state laws limiting their ability to build broadband networks, go ahead and overrule local authority to require telecom companies to properly compensate local governments for use of the ROW.

For Rent photo used under creative commons license, courtesy of HowNowDesign

New Video: Community Fiber Networks Better than Phone, Cable Networks

Tue, July 05, 2011 | Posted by christopher

Update: You can also watch the video over at the Huffington Post, in our first post as a HuffPo blogger.

While we were battling Time Warner Cable to preserve local authority in North Carolina, we developed a video comparing community fiber networks to incumbent DSL and cable networks to demonstration the incredible superiority of community networks.

We have updated the video for a national audience rather than a North Carolina-specific approach because community fiber networks around the country are similarly superior to incumbent offerings. And community networks around the country are threatened by massive corporations lobbying them out of existence in state legislatures.

Feel free to send feedback - especially suggestions for improvement - to broadband@muninetworks.org.

Without further ado, here is the new video comparing community fiber networks to big incumbent providers:

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Munis Tell Carriers: Forget You Guys

Sat, June 18, 2011 | Posted by christopher

MHT, Mass High Tech -- the Voice of New England Innovation -- recently turned a spotlight on the difficulty of creating Ubiquitous high-speed broadband. Always refreshing to see others understanding the real impediments to expanding fast, affordable, and reliable access to the Internet in this country:

For Andrew Rollins, chief software architect for Cambridge mobile analytics software as a service company Localytics Inc., the answer is to go DIY — at least for municipalities.
“I think the most interesting thing that is happening today is that you are looking at municipalities that are saying (to carriers), ‘Forget you guys. We are going to do it ourselves,’” Rollins said.

That is happening because there is no real business incentive for broadband carriers like Verizon Communications Inc. or Comcast Corp. to make the investment in infrastructure required to reach everyone in the U.S. Add to that the deals they have struck to function as monopolies in many locations, and it adds up to companies that really want to hold on to the status quo, Rollins said. “Somehow you have to incentivize these guys to build out the infrastructure and I don’t think they are going to do it on their own. They’re already gouging the heck out of customers today so why bother making that infrastructure if you are already getting that money out of people.” 

They go to discuss the backwards approach from North Carolina:

“Down in North Carolina they have been actually going out of their way saying the community fiber-to-the-home and broadband networks are bad and can’t happen,” she said. “That’s not going to get us there. If you say to the communities that you can’t do it yourself, that’s not an environment in which we can achieve success, not just in 5 years but in 10 or 20 years.”

Well worth the read.

Wisconsin Superintendent: No Really, Broadband is Essential for Education

Wed, June 08, 2011 | Posted by christopher

Tony Evers, the Wisconsin State Superintendent, has voiced concerns about a provision in Wisconsin' budget bill that we discussed yesterday. It would force Wisconsin to return tens of millions in broadband stimulus awards intended to connect schools and libraries in a few communities while also raising prices for most local governments, libraries, and schools around the country by killing the coop that connects the communities. Evers wrote the following letter on June 7 in response.

I am extremely concerned and alarmed by the telecommunications provisions which passed the Joint Finance Committee Friday night and their impact on Wisconsin’s public libraries, public and private schools, the university system, technical colleges, and WiscNet. These provisions will have a devastating impact on the University of Wisconsin System campuses and our schools and public libraries. This language was introduced very late in the legislative process and there was no time for any public review, comments or feedback from those impacted by these provisions.

From the UW perspective, this will require it to return the $39 million in broadband grants to the federal government. In addition, it will prohibit any UW campus from participating in advanced research networks linking research institutions worldwide. You cannot have a renowned research institution, like the UW-Madison, without having access to such networks.

From the public and private school and library perspective, seventy-five percent of our public schools and ninety-five percent of our public libraries get Internet access via WiscNet - a not-for-profit network service under the auspices of the UW-Madison. The provision in this legislation will very likely make it impossible for WiscNet to continue offering Internet access. If our schools and libraries must use other Internet providers most will pay at least 2-3 times more than what WiscNet now charges. Furthermore, other Internet providers base their charges on how much bandwidth a school or library has - the higher the bandwidth, the higher the Internet costs. WiscNet’s funding formula is not based on bandwidth. Thus as schools and libraries continue to increase their bandwidth, their WiscNet costs remain the same. With our schools and libraries facing substantial budget reductions, how can anyone justify making them pay more for less service?

It is very important to note that WiscNet provides much more than just Internet access. It offers a very successful networking service connecting higher education institutions, K-12 schools and libraries. For example, WiscNet hosts online tutorials, access to online learning resources and other services specifically targeted at our schools and libraries. These are services a commercial Internet provider will be unlikely to offer. This legislation will end over fifteen years of fostering a cooperative and collaborative association between higher education institutions, PK-12 schools and libraries. We need to continue fostering such associations, not eliminating them.

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There are some sources that say WiscNet is competing with the state’s BadgerNet network. But BadgerNet is a broadband network and it does not provide Internet service. The state Department of Administration has authorized several Internet providers, including WiscNet and some private sector providers, to offer Internet service over the BadgerNet network. Many of our school and libraries use BadgerNet for their broadband circuit and then use WiscNet as their Internet provider. And some sources claim that WiscNet provides telecommunication services but it is an Internet provider, not a telephone company.

Another issue being discussed is that as a not-for-profit entity, WiscNet has some type of advantage over the private sector. But BadgerNet - which is provided by private sector telecommunication carriers under state contract - is itself “affordable” to most schools and libraries only because it is heavily subsidized ($16.8 million annually) by state funds. To be clear, DPI supports the BadgerNet subsidy. But this subsidy is limited and as schools and libraries need more bandwidth not supported by the subsidy, they often look for other options besides BadgerNet.

On the issue of advanced networking and affordability, I would be remiss if I did not mention that the telecommunication carriers fully supported a decision by the current administration to return $23 million in federal funding. This was a decision that cost Wisconsin a great opportunity to provide fiber broadband connections to all the school districts and libraries, especially in rural areas, on BadgerNet. This action, and Friday’s action, taken together represent a lost opportunity and $62 million in lost federal competitive grants.

In conclusion, we all know the critical importance of having access to high-speed, affordable Internet access to educating our children and providing online information resources to the public via our libraries. As Wisconsin competes in the global economy we need to make absolutely certain that our schools and libraries have such access, especially in rural areas. WiscNet now provides this access, and much more, at very affordable costs. But its ability to continue its very successful services will likely be made impossible with this legislation. I ask your support to help ensure that the UW has access to research networks and that our schools and libraries have the local control to select WiscNet or any other Internet provider. More background information on this issue is on the WiscNet website at http://www.wiscnet.net.

If the above issues are of concern, contact your state representative and state senator soon because action by the legislature is likely within the next several days.

AT&T Tells Wisconsin "All Your Tax Dollar Are Belong to Us"

Tue, June 07, 2011 | Posted by christopher

For the rest of the summer, Wisconsin could be the new battleground in the ongoing effort for big companies like AT&T and Time Warner Cable to secure their de facto monopoly positions.

In North Carolina, Time Warner Cable passed a bill effectively preventing communities from building next-generation networks offering services far superior to what TWC offered. Now AT&T and its allies in Wisconsin are trying to stop local governments, universities, libraries, and schools from using a buying coop -- called WiscNet -- to procure better connections than AT&T will provide, at lower prices than AT&T would charge. Why compete when you can outlaw the competition?

WiscNet is essentially a buying coop -- a public/private partnership connecting, among others, University of Wisconsin schools, local governments, libraries, and local public schools. As Barry Orton, Professor of Telecommunications at UW-Madison reminded me, buying coops are "great for buyers, not so great for the sellers."

In this case, sellers like AT&T want to kill the coop so local governments, schools, and libraries, are forced to buy the connections they need from AT&T or other incumbents. This will mean more tax dollars going to AT&T rather than educating students, connecting police stations, and generally allowing public sector institutions to function. From the Wisconsin State Journal:

The motion prohibits the UW System from taking part in WiscNet, the network provider for 450 organizations, including K-12 schools, libraries, cities and county governments.

No one has any doubts that AT&T and its allies are squarely behind this measure.

To be clear, this has nothing to do with last-mile connections. WiscNet is not providing connections to residents. This is a question of whether local governments can use a network they build and operate collaboratively with other public institutions like UW or whether they have to take whatever AT&T is selling (many small towns only have a single incumbent offering these dedicated access connections).

Last year, we wrote about Republican opposition to a broadband stimulus project that is expanding WiscNet to four local communities. On Friday night, that effort was rekindled when some language was inserted into the budget bill.

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Some of the language:

Telecommunication Services: Prohibit the Board of Regents, the UW System, any UW institution, or the UW Extension, directly or indirectly, from doing any of the following: (a) receiving funds from any award from the National Telecommunications and Information Administration (NTIA) under the U.S. Department of Commerce for the Building Community Capacity through Broadband (BCCB) project; (b) disbursing, spending, loaning, granting, or in any other way distributing or committing to distribute any funds received with respect to, budgeted to, or allocated for the BCCB project; and (c) participating in the planning, organization, funding, implementation or operation of the BCCB project.

This section means that Wisconsin, having already returned $23 million in broadband stimulus awards, would return tens of millions more dollars that should be spent on improving broadband access to schools, libraries, police stations, hospitals, etc.

The University of Wisconsin Extension Service received two awards from the stimulus -- one to increase digital inclusion and another to expand infrastructure to community anchor institutions that are currently unserved or underserved. In order to receive this award, they had to document that the services needed for schools, libraries, and hospitals (for instance) is not currently available. And they did.

These institutions need robust connections, but all across the country, incumbent providers want to offer DSL, cable, and perhaps T.1 lines at inflated prices because they are the only option. They have very little incentive to invest in fiber-optics and lease dark fiber or even provide 100Mbps circuits.

But the language goes further...

Prohibit the Board of Regents, the UW System, any UW institution, or the UW Extension from becoming or remaining a member, shareholder, or partner in or with any company, corporation, non-profit association, joint venture, cooperative, partnership, consortium, or any other individual or entity that offers, resells, or provides telecommunications services or information technology services to members of the general public, or to any private entity, or to any public entity other than the Board, the UW System, any UW institution, or the UW Extension.

This is fascinating. The ideology could not be more clear: public universities exist to funnel money to AT&T. If car mechanics were as effective as AT&T in lobbying, police departments would be prohibited from repairing their own cars. If Starbucks were as effective as AT&T lobbying, public institutions would be prohibited from owning or using instant-coffee makers. Got others? Submit in the comments!

More seriously, this provision could cut make it impossible for the University of Wisconsin, a tremendous University, to participate on Internet2, NLR, and other essential networks for research institutions. There is no logic to this, just an ideology opposed to anything publicly owned and the massive lobbying clout of AT&T.

We need to spread the word in Wisconsin: public institutions exist to serve the public, not funnel money to AT&T. Killing WiscNet means more tax dollars going to AT&T rather than educating students, putting police on the streets, or enhancing health care.

We will follow up in the near future to get beyond AT&T's talking points and clarify some confusion.

In the meantime, you can learn more from WiscNet. The language above is in the budget bill. It has to go through the Legislature, a process that will likely last until August or later. This could be dealt with as soon as Tuesday, June 14. Nonetheless, organizing to defend WiscNet must start immediately (and already has). Public institutions have tight enough budgets without being forced to increase telecom expenditures just to make AT&T happy.

Update: Ugh, I mangled the reference in the title. It should have been "All Your Tax Dollar Are Belong to Us." Apologies.

Global CIO: Consider the Benefits of Community Broadband Networks

Mon, June 06, 2011 | Posted by christopher
Publication Date: 
June 2, 2011
Author(s): 
Jonathan Feldman
Publication Title: 
Information Week

Information Week has alerted Chief Information Officers (CIOs) that they need to pay attention to community broadband networks. Jonathan Feldman's column explains "What North Carolina's Broadband Battlefield Means to You."

The lessons have little to do with North Carolina and everything to do with the future of broadband Internet access. Community networks offer higher speed, more reliable, and more affordable connections to businesses and other entities than incumbent operators.

Feldman opens with a North Carolina business owner emailing him about wanting to duplicate Chattanooga's amazing broadband options and futuristic smart grid. Too bad North Carolina's Legislature just passed a bill to effectively prohibit NC towns from doing that.

MuniNetworks.org frequently decries the lack of choices among service providers, so it is gratifying to see Feldman make the same point:

Those of us who approve telecom budgets, whether in North Carolina or other states, know there really isn't a broadband marketplace. In contrast, we can choose among 50 providers of Web hosting services, and they're all trying to differentiate themselves based on quality and features. THAT'S a marketplace. What exists today in broadband telecom is essentially a choice between the telco and the region's cable operator.

And further on, a strong endorsement for communities that have made public broadband investments:

Unless you're a telecom carrier, you should be interested in doing business in a region where the government is building out next-generation broadband infrastructure. Whether you work for a large business that requires fiber optic capabilities (or "lambdas," which are virtual fiber pipes), or whether you simply need IP service, the lower price/performance levels of such regions are highly attractive.

…

Be aware of the telecom regulatory environment in any state your company is expanding into, especially as other states follow North Carolina's example. It may not be a make or break consideration, but it's one that you should bring up with your board when discussing site selection.

Feldman notes that these networks are not easy to build (a point that resonates with us - communities build these networks because they have to, not because they want to).

This is an excellent column, one we hope resonates with the many businesses that need faster, more reliable, and affordable access to the Internet. When massive companies like Time Warner Cable lobby state legislatures to preempt local authority to build networks, they are taking aim at all residents and local businesses. Businesses should recognize the benefits of breaking the duopoly that controls a key input for all commerce in the 21st century.

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Remember Michael Tiemann's letter to Governor Perdue, begging her not to let Time Warner Cable's anti-muni broadband bill become law (she instead agreed with Time Warner Cable, CenturyLink, and AT&T that they should control the future of IT in North Carolina). In that letter, he described the difficulty of working with TWC:

On Sunday May 15th you may have read about our latest investment in North Carolina, Manifold Recording. This was the feature story in the Arts & Living section, and the top right-hand text box on the front page. One of the most difficult and expensive line-items in this multi-million dollar project was securing a broadband link to the site in rural Chatham County. I spent more than two years begging Time Warner to sell me a service that costs 50x more than it should, and that's after I agreed to pay 100% of the installation costs for more than a mile of fiber.

Community networks are pro-business and it is long past time businesses should recognize their advantages. Let's hope we can make some progress in this area.

Link: 
Information Week Global CIO: What North Carolina's Broadband Battlefield Means To You
Read more »

Poignant Videos from North Carolina H129 Legislation

Fri, June 03, 2011 | Posted by christopher

Though the North Carolina fight is over, I wanted to include these two videos in our archive in case they are useful to those in the future who will undoubtedly cover the same ground.

One is the excellent local news video asking about the role of lobbyists and political contributions on the laws that get passed and the other captures an important moment from debates in the Legislature - thanks to NC Policy Watch for posting.

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Policy In-Depth: Debate over Muni Broadband Competing With Private Sector

Thu, June 02, 2011 | Posted by christopher

On June 1, the Information Technology and Innovation Foundation held an oxford-style debate over the proposition: "Governments should neither subsidize nor operate broadband networks to compete with commercial ones."  

Jim Baller and I spoke against the proposition while Rob Atkinson and Jeff Eisenach defended it during the 2 hour, 15 minute session.  I was unable to be in DC and thus participated by the magic of modern telecommunications.  

This is a long but valuable and unique discussion.  We left talking points behind, actually responded to the points raised by the other side, and presented both sides of this debate in a reasonable manner.  In short, this is exactly the kind of discussion we would elected officials to consider before legislating on the matter.  But it very rarely happens -- nothing even remotely close to it occured in North Carolina when Time Warner Cable pushed its bill through the Legislature to enact a de facto ban on muni networks in the state.

You can watch it here.

 

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