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Bill to Boost Broadband in Minnesota Struggles in Legislature

In a revealing video about the Internet access problem in rural Minnesota, Annandale City Administrator Kelly Hinnenkamp below describes her town's struggle with connectivity. The video is the latest in a series on the Minnesota Senate DFL YouTube page intended to shed light on the critical situation in the state.

Hinnenkamp describes broadband in the areas outside of Annadale as "horrific." She goes on to discuss how the community's poor connectivity negatively impacts its economic health. She shares a story about entrepreneurs from an artisan spice business once located in Annandale. The company started with online sales but the owners anticipated opening a storefront in the downtown area of the lake community. After contending with eight outages in three weeks, the new business pulled up stakes and moved to Buffalo. 

Buffalo, located only 15 minutes away from Annandale, offers fast, reliable, affordable fiber service to local businesses.

In a February Minnesta Public Radio News article, Hinnenkamp told Dave Peters:

“Broadband is probably the single most important issue in our community right now,” she said. “Our big issue is not that we don’t have service but that we have one provider that has shown little interest in improving it. Broadband is our future."

In a Star Tribune article, Pete Kormanik, the owner of a local McDonald's, expressed his concern as a business owner:

Downloading data for a digital menu board — a task that would have taken 30 minutes at his other restaurants — dragged on for more than four hours.

After delays in processing credit cards, watching training videos and transmitting orders, Kormanik switched to an AT & T antenna. But a cloudy day can slow that service.

“If you can’t stay current with [connectivity], you’re just going to fall behind,” Kormanik said. “And businesses won’t go into those locations.”

Watch the brief interview with Hinnenkamp below or visit the series website to see more interviews. In the words of Dan Dorman, Executive Director of the Greater Minnesota Partnership: 

"It's time to stop talkin' and do something."

Broadband has been discussed for the past several years in Minnesota. Several task forces and reports have all concluded that lack of broadband in Minnesota, especially in the rural areas, will have detrimental effects on the future. Senator Matt Schmit, a DFLer from Red Wing, introduced SF 2056 [PDF] this session to inspire momentum for local broadband projects. Representative Erik Simonson, DFL Duluth, has been pushing the measure in the House.

The bill establishes a grant and loan program focused on local middle- and last-mile projects in areas like Annandale. Dubbed the Border to Border Infrastructure Program, it would bring $100,000,000 from the state's general fund to be applied to broadband projects. The bill has bipartisan support but has not been prioritized by either the Governor or Senate leadership within the Legislature. Meanwhile, Comcast and other incumbent lobbyists have been trying to minimize the fund and any impact it could have.

While it may not become a reality this legislative session, the bill has brought serious reflection on the critical need for Minnesota's rural areas. One of the attractive features of the bill is that funds can be used to supplement funding for local projects. This approach allows local communities to determine the best path for their own needs.

Video: 
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Minnesota Local Governments Advance Super Fast Internet Networks

Publication Date: 
March 19, 2014
Author(s): 
Christopher Mitchell
Author(s): 
Lisa Gonzalez

Local governments in Minnesota have been at the forefront of expanding fast, affordable, and reliable Internet access - often in some of the most challenging areas of the state. ILSR has just released a policy brief to explore some of these approaches: Minnesota Local Governments Advance Super Fast Internet Networks.

The full report is available here.

The brief examines five communities that have taken different approaches to expanding access, from working with a trusted local partner to creating a new cooperative to building community-wide FTTH networks.

Lac qui Parle County has worked with Farmers Mutual Telephone cooperative to bring fiber networks to those who had been stuck on dial-up. Finding itself in a similar situation with no reliable partner, Sibley County is creating a new coop to work with.

Scott County built a fiber ring to connect community anchor institutsion to dramatically expand access to high capacity networks and lower telecommunications budgets. That network has helped to lure several major employers to the area by leasing fiber to them.

Windom and Monticello have built FTTH networks in extremely challenging conditions. Though Windom is far smaller than most have believed is feasible to build such a network, it has thrived and is now connecting many of the small towns surrounding it. It was essential in retaining jobs in the community that would have been lost without it and has attracted new jobs to the region. Monticello is a younger network and has remarkably benefited the community even as it has struggled financially due to dirty tricks from the telephone and cable companies.

The policy brief makes some policy recommendations while focusing on some local solutions to difficult problems in ensuring all Minnesotans have fast, affordable, and reliable Internet access.

Lexingtonians Consider Municipal Network Options in Kentucky

Community leaders in Lexington are the latest to stand at a fork in the broadband road. In September, the franchise agreement between the Lexington-Fayette Urban County Government (LFUCG) and Time Warner Cable expired, resulting in a month-to-month agreement continuation. As they negotiate a new contract, local citizens have called for consideration of a municipal network.

When the contract was originally negotiated in the 1990s, the community was primarily interested in cable TV servce. As broadband has become critical infrastructure for residents, businesses, and government, the community's focus shifted. Lexington customers have complained repeatedly about Internet and cable TV service from Time Warner Cable. A February Kentucky.com article noted that local consumers complained over 300 times to Lexington's Urban County Government, the entity responsible for contract negotiations. According to the article:

The biggest single category of complaints was about price and the volatility of monthly rates. Other complaints were that the cable TV service "repeatedly fails, resets or freezes"; that there was an extended wait time and/or "unhelpful responses" in customer service; and that email and Internet "had declined in service" and showed "significantly slower service."

The City Council considered the situation bad enough to debate whether or not to appoint an ombudsman to advocate for Lexington consumers.

The community wonders how the proposed merger between Time Warner Cable and Comcast will impact their current service. While the Vice Mayor seems to think it is an "almost golden opportunity" to deal with a different provider, local citizen Roy M. Cornett has a different perspective. He wrote for Business Lexington.com:

We can choose to maintain the status quo and allow out-of-state corporations to continue to control our access to the Internet, or we can rescind the franchise agreements to the copper and fiber lying in the ground around our community and treat the Internet as the piece of infrastructure essential for our future economic growth that it is. 

We would just note that this is not an either/or proposition. They can both develop a new franchise or not separately from deciding to move forward with some smart municipal investments.

As the LFCUG has moved forward with franchise negotiations, they opened up the discussion at City Council meetings. Cornett attended a Cable Franchise Workshop to learn about the process. What he learned is that the LFCUG possesses very little power in negotiations, due to federal law. In fact, if Time Warner Cable meets a very low standard, the LFCUG has no option but to renew.

Lexington Kentucky Logo

Cornett and others in the community wonder if Lexington wants to go down the same Internet road again - expensive, unreliable, and ruled from a far off corner office. He addresses the question in another article on the Barefoot and Progressive site:

If the Time Warner [Cable] and Comcast merger goes through, Lexington will not only have piss poor download speeds, but caps on the amount of data you can use in a month. Comcast currently has a cap of 300 gigabytes per month for customers in Elizabethtown and Campbellsville, Kentucky. To put this in perspective, my family’s usage as of February 15, was 99 gigabytes for the month and we still have two weeks to go. I am terrified of what it will be in a few years when my youngest kids become teenagers. 

Cornett reached out to us when he wanted to learn more about the possibilities of a muni for Lexington:

The City of Chattanooga just recently built a municipal ISP to provide gigabit service to 147,000 homes at a cost of $330 million (of which $111 million was provided by the feds). Christopher Mitchell, the director of Telecommunications as Commons Initiative for the Institute for Local Self-Reliance, did some very rough back-of-the-envelope calculations for the City of Lexington and estimates that a full gigabit fiber network to every resident and business would be somewhere in the $200 million range. 

Those are huge numbers and should give anyone pause, but consider that we are spending $1.6 million on sidewalks for Tates Creek Road, $17 million for resurfacing a few blocks of South Limestone and $310 million dollars renovating Rupp Arena. Ask yourself if any of the above projects could come close to offering the economic impact that gigabit internet service would bring. It isn’t even close.

In his Business Lexington.com article, Cornett encourages a new coalition, the Bluegrass Economic Advancement Movement (BEAM), to take up the muni possibility. The group is a collaboration between Louisville and Lexington with support from the Brookings Institute. The goal of BEAM is to bring quality jobs to the Bluegrass and increase export activity.

Cornett, who we expect to hear more from, writes in his Barefoot and Progressive article:

I won’t speculate on the motives of the corporations for attempting to kill competition, but the issue of our city possessing a modern, reasonably priced, continually upgraded network is essential to our future.

This is not a fight we should shy away from. On the contrary, this is a fight we need to embrace, and it can be the lynchpin that takes the BEAM super region from a good idea to a shining success. I urge Mayors Gray and Fischer to – at the very least – explore the option of retaking control of this vital component of our infrastructure.

GAO Report: Government Telecom Investments Help Local Businesses

The Government Accountability Office released a report today examining economic development and government-spurred broadband deployment. The report, titled Telecommunications: Federal Broadband Deployment Programs and Small Business looks at the effects of stimulus projects on opportunities for small business. 

According to the press release:

“GAO’s investigation confirms the success of the Recovery Act’s broadband programs," said Rep. Waxman.  “In rural and urban areas across the country, small businesses are benefitting from higher speeds and lower prices thanks to federal investment in this essential infrastructure.  Expanding broadband access and quality is critical for American competiveness in the 21st century global economy. These were public dollars well spent.”

The report reviews communities around the country where either federal dollars have been invested in networks or local governments have made such investments. The results were consistent with our findings over the years - municipal networks create a business-friendly environment and contribute to economic development. 

According to the report summary:

According to small businesses GAO met with, the speed and reliability of their broadband service improved after they began using federally funded or municipal networks.

Regarding competition, the GAO find that municipal networks spur competitor investments:

For example, following the construction of a fiber-to-the-home municipal network in Monticello, Minnesota, the two other broadband providers in the area made investments in their infrastructure to improve their broadband speeds. One of these providers stated that all of its networks undergo periodic upgrades to improve service, but upgrade schedules can change in order to stay competitive when there is a new service provider in a particular market.

Westminster's Fiber Project Drawing Business from New York City to Maryland

Westminster's FTTP pilot project continues to blossom. We recently heard from Dr. Robert Wack, one of the local leaders of the project.

Engineering, the first phase, is almost completed with bids for construction soon to be solicited. 

Even before any fiber is in the ground, Westminster is feeling the positive economic development effects from the network. According to Dr. Wack, Carlisle Etcetera, a women's fashion clothing  company, will be relocating from New York City to Westminster. Carlisle will bring its distribution and data centers because it will have access to the next generation fiber network.

The local Industrial Development Authority is an official supporter of the project and will contribute local funds for capital costs.

Being a Gig City: Incubating Small Businesses

This is the first in a series of posts examining a premier Gigabit Community - Wilson, North Carolina.

According to the U.S. Small Business Administration, 85% of all jobs originate from companies with fewer than 30 employees, and 87% of businesses which started through business incubators have succeeded after five years. So Wilson, North Carolina, focused its "Greenlight" gigabit beam on its local business incubator, the Upper Coastal Plan Business Development Center. "Greenlight is driven by three guiding principles," said Will Aycock, the network's General Manager. "Supporting the economic health of the community, improving the delivery of city services, and enhancing the quality of life for the citizens of Wilson." Providing access to symmetrical gigabit speeds has allowed the community's small business incubator to take its services to the next level, to give budding entrepreneurs access to the future today and in a uniquely affordable way.

According to Greg Goddard, Executive Director of the Upper Coastal Plain Council of Government, access to gigabit speeds has meant "Taking our incubation to the next level." Historically their business incubator has attracted "low tech" entrepreneurs: consultants, counselors, state associations, childcare and healthcare providers, people who need work space after normal office hours, even Chic Fil-A administrators, for employee training. The incubator provides a full suite of services including a receptionist, copy and fax machines, phones, 24 hour secure entry, kitchen, meeting rooms, training classes, access to experts, parking, and now, symmetrical gigabit speeds, all for an affordable price. "An 8' by 8' cubicle with those full-suite services leases at $275/month," he said. The goal is to stimulate budding internet-age businesses.

Free Wi-Fi in Wilson

And it has, even for young entrepreneurs elsewhere in the state. For a tech entrepreneur like Dan Holt from Wake Forest, renting space at this Wilson-based incubator lets him be part of the future, and to experience the possible which is impossible at his home in Wake Forest only 30 miles away. Dan is a self-described techie for a local Raleigh defense subcontractor but he likes to be known as founder of the Wake Forest Fiber Optic Initiative.

Dan wanted to put together research for his town government on why they needed to establish a fiber to the home network in Wake Forest. That search led him to Wilson. "They are the only Gigabit City in North Carolina. It's 30 minutes from my home. Not every town has an incubator where you can rent a cubical or office space affordably, giving you access to things like a receptionist, mailroom, fax machine, office space, and gigabit fiber internet. If I were to branch out into any major city, it would be in the $1000's of dollar range, just for the internet service alone. They are passionate" about their Gigabit network in Wilson. "They are mentoring the rest of the state."

Having access to Gigabit speeds in Wilson's business incubator has allowed Dan to connect servers and to mirror "what normal life would be if I had Gigabit access in my Wake Forest home." "The future is all about video," he reiterated. "I have several computers tied into virtual machines I can load up with Netflix and run at the same time." In Wilson, he said "It works." "You can connect easily to places that can take advantage of these upload speeds: DropBox, Google Drive, YouTube, sending large files through Microsoft Exchange. Some websites can't even take advantage of these speeds. The bandwidth at their end is not there."

Wake Forest Gigabit Logo

According to Dan, Wilson is set for the future because of its Gigabit network, and he wants the same for Wake Forest. "If you look at South Carolina, Georgia and Florida, there are no networks like this and it won't stop at 2 gig, it's going to 10 and then multiples." He continues, "As time goes on, as more folks find out about Wilson, the City is going to lure alot of people in from around our region, and from other states. If you look at the broadband maps out there, Virginia is the only state close to DC that comes anywhere near this capacity."

When asked if he'll move to Wilson, Dan responded "As a techie, in a heartbeat," but he owns his home in Wake Forest. For now, his Gigabit City incubator has provided him the ability to explore a public/private relationship with the Town of Wake Forest, a place where he could take his Mayor and IT Director and show them what is possible. He would, he added with a virtual wink, like to show Wilson's gigabit capability to his defense industry boss.

In July 2013, Wilson was honored to be North Carolina's first Gigabit City (community-owned). Folks keep asking us "What is it like to be a GigCity?" We plan to release a series of vignettes on how our gigabit infrastructure contributes to why Wilson is a great place to live, work and play in the 21st Century. For more information, contact Jerry Stancil at jstancil@wilsonnc.org (252) 293-5313.

Baltimore Mayor: You Can't Grow Jobs with Slow Internet

Baltimore Mayor Stephanie Rawlings-Blake sees expanding Internet access as a justice issue and wants to make sure every Baltimore resident benefits from City assets, including fiber optic cables. To that end, the City is examining how it can use its conduit and fiber to improve Internet access.

We have previously covered Baltimore and its consideration of public investments to expand Internet access after both FiOS and Google decided not to invest there.

In the interview below, Mayor Rawlings-Blake expands on why this is important, saying "You can't grow jobs with slow Internet... people don't want to invest in communities where they feel like they are running through sludge, trying to catch up with other businesses," going on to say, "People want to be on the cutting edge."

Auburn Essential Services; A Workhorse in Northeast Indiana Saves Jobs, Serves Public

In 1985, Auburn Electric became one of the first communities in the midwest to deploy fiber. At the time, the purpose was to improve electric and voice systems substation communications within the municipal utility. That investment laid the foundation for a municipal network that now encourages economic development and saves public dollars while enhancing services.

Auburn expanded its fiber network beyond electric systems in 1998. The utility began using the network to serve city and county government operations. It is not well known, but Auburn offered gigabit service to its public sector customers way back in 1998.

The benefits from the deployment prompted community leaders to develop an Information Technology Master Plan in 1998 that would answer the question of what other ways the fiber could serve the community? As part of the Master Plan, Auburn leaders collected information from other communities that were capitalizing on their own local fiber. While Auburn made no immediate plans, they kept an open mind, waiting until the time was right.

In 2004, Cooper Tire and Rubber (now Cooper Standard) was about to be sold from its parent company. The $1.6 billion auto component manufacturer needed a data center but bandwidth was insufficient and inconsistent in Auburn. Cooper considered leaving because the incumbents, Mediacom and AT&T, could not or would not provide the broadband capacity the company needed. If Cooper left town, an estimated $7 million in wages and benefits from 75 high-paying tech jobs would also leave. At the time, Auburn was home to 12,500 people.

County Courthouse in Auburn, Indiana

According to Schweitzer, the City tried to persuade the telephone company to find a solution with Cooper but the two could not reach an agreement. Rather than lose Cooper, the City of Auburn stepped in to fill the connectivity gap in 2005.

In a 2007 interview with Public Power magazine, Schweitzer noted advantages in Auburn that facilitated the project:

“We also had a major tier-one Internet provider with a point of presence in Auburn, so we had some primary pieces in place to affordably and quickly extend business-class Internet service to this customer. We were preparing for this growth, but the trigger was this company that was going to leave unless we could serve them,” Schweitzer said. 

Shortly after connecting Cooper Standard, Auburn began serving several other businesses. The success of the venture lead to a feasibility study which included a market survey. The results showed residential and commercial interest in a municipal network, encouraging Auburn Electric to ask the community for guidance on how to proceed. From the 2007 interview:

“Our town hall meetings were very open,” said Schweitzer. “This broadband effort is about our community, and our community has told us we need to pursue this important project. We have tried to do a thorough job of communicating with customers to determine their needs as we moved forward.”

In pursuing the high-speed broadband project, the city follows the same philosophy it has used for other city infrastructure projects, Schweitzer said.

“We have good communication with the community, as this is a grass roots effort, rather than a top-down approach,” Schweitzer said. “We are also doing due diligence in all new areas we encounter. We aren’t making any assumptions on this project. The only thing we would like to do differently is to move more quickly on the project, but we know our steady approach will serve us well.”

Auburn Electric, the owner of the network, operates and maintains the fiber infrastructure. The utility expanded the network incrementally to serve its core business. The network is approximately 205 miles and cost approximately $12 million for fiber and electronics. Auburn Electric uses the network for Advanced Metering, SCADA, and smart grid applications. Auburn Essential Services (AES) leases fiber from Auburn Electric to offer customers data, voice, and video services.

Auburn Essential Services Map

The electric utility created AES as a sub-department to operate the electronics that provide telecommunications services. In order to purchase the electronics to light up the network, AES borrowed $2.5 million from Auburn Electric via an interdepartmental loan in 2005. Within seven months, AES was cash flow positive.

By 2007, AES was also serving small business and residential Internet and phone needs. In 2012, the utility started offering television service. The network has passed approximately 6,500 properties after eight years of incremental expansion.

In a recent interview on the Broadband Bits podcast, Schweitzer told Chris Mitchell the network has helped keep local prices in check. Residential Internet prices vary from $22.95 (1.5 Mbps/512 Kbps) to $169.95 (55 Mbps/10 Mbps) per month. AES does not use pricing gimmicks, reinforcing the philosophy that every customer matters. From the podcast interview:

"We are not going out there trying to lure customers with the lowest price," says Schweitzer,"we going out there to serve the community with a healthy, sustainable, quality product."

AES kept the public informed of how the build was proceeding with interactive maps, available here. This kind of transparency is well in keeping with the traditional of community ownership of infrastructure.

Op-Ed: Baltimore Makes Smart Move with Fiber Investment

On November 25, the Baltimore Sun ran this opinion piece by me regarding Baltimore's approach to expanding Internet access in the city.

Baltimore Mayor Stephanie Rawlings-Blake recently spoke the plain truth: “You can’t grow jobs with slow Internet.”

This simple statement is the best explanation for why Baltimore is examining how it can use existing City assets and smart investments in the near future to expand access to fast, affordable, and reliable Internet access. It is also a slap across Comcast’s face.

The big cable and telephone companies have insisted for years that they already deliver the services residents and businesses need. But they also claim to offer reasonable prices that just happen to increase year after year with few customers having other options to choose from.

Baltimore’s reality is that Comcast does indeed offer speeds that are faster than many in rural Maryland can access. But they are not even in the same league as cities like Chattanooga, where every address in the community has access to the fastest speeds available anywhere in the nation, and at some of the lowest prices. There, as in hundreds of communities across the country, the local government built its own next-generation network.

Whenever a city announces the possibility of investing in a network, the cable industry public relations machine kicks into high gear. They argue that we have a plethora of choices for Internet access. The sleight of hand behind this claim is to include LTE wireless networks as a replacement for cable – something almost no household does because replacing your home wired connection with LTE will break your budget. According to bandwidth-management firm Sandvine, the average household uses more than 50 gigabytes of data each month. Between the data caps and overage fees from AT&T, that will cost over $500/month.

Meanwhile, the overwhelming majority of community owned networks are doing exactly what they intended – breaking even financially while providing a valuable public service. Big cable companies argue that these networks have failed if they aren’t making big profits each year, a misunderstanding of public accounting. Community owned networks aim to break even, not make a profit.

When Windom, Minnesota, ended a year with a $50,000 deficit from a network that kept many local jobs in the community, few complained. Ask any local government official what is more important: 10 jobs or $50,000 in the general fund. No contest, especially when the accounting does not include the tens of thousands saved by a local government that no longer has to lease expensive voice and data connections for schools and municipal facilities.

Chattanooga is often cited out as the most successful municipal network after becoming the first US city with universal gigabit access and having helped created 6,000 jobs. But Thomasville, Georgia, and Spanish Fork, Utah, have operated networks for over a decade and generate more than a million dollars each year for the general fund from the telecommunications net income.

However, a few community owned networks have failed, just as thousands of privately owned telecommunications companies have disappeared or declared bankruptcy in a very difficult business. Provo is a favorite of the cable lobbyists, who generally neglect to note that it had to compete with one hand tied behind its back due to Utah state laws pushed by Comcast and US West (now CenturyLink). Some 19 states have created special barriers to discourage publicly owned networks.

Let’s be clear, very few expect Baltimore to suddenly build a citywide fiber optic network offering residential services in competition with Comcast.

Baltimore will likely take another path, expanding the fiber-optic network it already owns to better benefit community anchor institutions, local businesses, and potentially even residents. This is a very low-risk approach similar to what Seattle has done for years. Now Seattle has a partnership with a company called Gigabit Squared that is building a gigabit network out to tens of thousands of households.

None of these successes mean local governments should rush unprepared into a network investment. Nor should they be scared off by cable lobbyists trying to preserve what is effectively a monopoly. Building a successful network is a challenge, but so is trying to grow an economy while relying on yesterday’s technology at artificially inflated rates.

SpringNet Continues Driving Jobs and Revenue for Local Community

A year has passed since we covered SpringNet in Springfield, Missouri, and its remarkable impact on local businesses and economic development. We recently spoke with SpringNet Director, Todd Murren, and Network Architecture Manager, Todd Christell, to get an update on how the network is progressing.

Demand for SpringNet’s high-speed data services continues to grow steadily. Financial statements for City Utilities of Springfield show the network generated $16.4-million in operating revenue last year against costs of $13.2-million. Better yet, revenues have increased around 3% per year while cost increases are closer to 0.5%. The end result is close to $3 million in annual net income for SpringNet. And all of this comes from a network that only serves commercial and public sector clients because Missouri state law restricts municipal network provision to only “Internet service,” meaning SpringNet cannot offer triple-play packages to compete with incumbent providers.

One of the highlights of SpringNet’s economic development success has been the attraction and retention of travel giant Expedia. After a large national provider failed to deliver on negotiations with the company, SpringNet stepped in to make sure Expedia brought its call center to Springfield. That effort has paid off handsomely for SpringNet and the local community. Expedia now employs close to 900 in the area after announcing in July that it was hiring another 100 employees in Springfield.

Up next for SpringNet is an effort to leverage its fiber infrastructure to create even more jobs. Believing that future job growth will revolve around the advancements enabled by gigabit networks, SpringNet is working with the Mid-America Technology Alliance (MATA) to host a hackathon with partners in Kansas City to explore what is possible between gigabit cities.

As Murren and Christell tell it, someone in Springfield can now send data to Kansas City with a 5-millisecond delay. It’s like they are in same building despite being hundreds of miles apart. This capability spells opportunity for new ways of doing business and delivering services. SpringNet wants to help the gigabit community develop these opportunities.