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Vermont Draft Telecom Plan Fails to Deliver on Many Fronts

Last week, the Vermont Department of Public Service began a series of public hearings on the public comment draft of its State Telecommunications Plan. The plan is intended to asses the current state of the telecom landscape in Vermont, map out goals and benchmarks for the next 10 years, and provide recommendations for how to achieve them. The plan sets a target of 100 megabit per second symmetrical connections for every home and business in the state by 2024.

Oddly enough, achieving that even today would put them behind many metropolitan areas across the United States. The technology needed to deliver 100 Mbps connections is essentially the same that would be used to deliver 1 Gbps, begging the question why such a limited goal?

The 100/100 mbps symmetrical target is for 10 years into the future, but in the nearer term the plan calls for universal 4/1 Mbps coverage, raised to 10/1 Mbps coverage by 2020. While it may at first glance seem reasonable to set gradually rising targets, these long and short term goals actually have the potential to conflict with each other.

As pointed out by Vermont Public Radio, the 100/100 Mbps standard would likely require universal FTTH, or at least fiber to the node combined with other technological advances and investments. Meeting this goal would require a huge investment in next generation fiber optic infrastructure, yet the Telecommunications Plan calls for funding priorities to be focused on achieving universal 4/1 mbps coverage for the next 6 years. This lower standard will likely be met with a combination of last generation technologies like copper wire DSL and wireless that are incapable of meeting the 100/100 standard.

Continuing to build out older systems while deferring investments in fiber, which is adaptable to meet just about any future need, seems illogical. It’s a bit like saying you’re going to put all your expendable income for the next six years into repairing your VCR and buying tapes, while promising you’ll buy a DVD player immediately after. 

While the goal of first guaranteeing all Vermonters some basic level of coverage is admirable, Vermont can do better by setting higher goals for itself. However, a real plan would require Vermont to actually invest in better connections rather than continuing to award grants to pokey incumbent providers like Comcast and FairPoint.

EC Fiber Logo

Leslie Nulty, a former Project Coordinator with the locally-owned, open access EC Fiber Network in the eastern part of state, put it best in her scathing criticism of the plan:

The long-range vision is admirable, but unfortunately the plan has no guidance at all as to how to reach it. It’s near-term guidelines, on the other hand, assure that current public policy will hinder, if not completely block, achievement of the long-term “Vision.”

Another concerning piece of the Plan is its decidedly skeptical attitude toward public networks, or anything that deviates from the standard playbook of offering grants to incumbent provider to entice them to build. From page vii of the Telecommunications Plan:

7. Vermont policy makers should carefully consider the potential negative outcomes of state and municipalities directly competing with private firms in the provision of telecommunications services, especially in areas where consumers are adequately served. Vermont should refrain from policies, including financial incentives, that have the net effect of diminishing competitive choice in the marketplace.

There is no evidence that municipal networks diminish competititon while there is plenty of evidence that municipal networks have resulted in more competition and increased investment from incumbent providers. The idea that more competition results in less competition is worthy of an explanation from George Orwell. 

“Competitive choice” is another goal that sounds good, but in this context it is used primarily to discourage investment in local networks that allow communities to determine and meet their own needs. To communities that have limited or no broadband access, this in effect announces that the state has little interest in helping them build their own networks, they should just sit tight until they get an already obsolete 4/1 mbps connection from a private provider, subsidized by the state, sometime around 2017 or 2018. 

On the whole, this Telecommunications Plan offers minimalist requirements for “basic” broadband that are already obsolete, and completely ignores other important measures of quality connectivity, such as latency. It offers essentially no new funding to back up its promises, with only vague mentions of tapping “public and private sources” while using existing revenue streams to invest in meeting outdated standards through private providers. The list of recommendations mostly read like an endorsement of the status quo, which stands at odds with the headline grabbing pronouncements of long-term goals. In short, it seems like a plan designed to have the most public relations impact with the minimal expense of political, financial, or even intellectual capital. 

For a more detailed breakdown of the Vermont Telecommunications Plan’s failings from someone more versed in the local landscape, read the full testimony given by Leslie Nulty [pdf] at a public hearing on the issue. She touches on all the issues mentioned above and a variety of others, from the plan’s lack of support for open access network models to new funding mechanisms preferable to grants to incumbents, such as revolving loan funds to finance network buildouts. 

Gig.U Delivers its Gigabit to Maine

We continue to watch the Gig.U project with interest as some universities are teaming up with providers to deliver gigabit services to selected areas, generally around high tech campuses.

One of the first project announcements has come from Orono, Maine. The University of Maine and a private company called GWI are teaming up to bring real broadband to Main Street.

The gigabit announcement came on the heels of a major announcement from Time Warner Cable - they are increasing residential speeds in Maine from 8-10 Mbps (or from 15 to 20 Mbps for those speed demons) and doubling their upstream speeds from .5 to 1 Mbps (or from 1 to 2 Mbps for those living in the fast lane).

So Orono, which is talking about speeds of 50-1000 times faster, should have quite the advantage.

We last heard of GWI due to its involvement in the Three-Ring Binder project that brought middle mile connections throughout the state to start recovering from the long-standing underinvestment from Verizon (now FairPoint). We wrote about FairPoint's attempt to kill competition before it started.

Now GWI will be building a gigabit open access network in this community that will offer much faster speeds at much lower prices than incumbent operators do. It is certainly an improvement over the status quo in the short term, as noted by the Bangor Daily News.

“We will plant the first seed in fertile economic soil,” he said. Kittredge said the Orono and Old Town area, with the University of Maine at the center, is prime real estate for getting the high-speed service off the ground and considering whether it will work in larger markets such as Bangor or rural markets in northern and eastern Maine.

For area businesses and researchers inside and outside the university, having so much more bandwidth available will open up new opportunities with far-reaching consequences, according to Kittredge.

However, we continue to be concerned about the long term ramifications of this approach. GWI will own the network and decide what the rules of the network are. Who will be running GWI in 5, 10, or 20 years? Could a major company like FairPoint or Time Warner Cable buy it and fundamentally change it? Companies come and go, but communities will need fast, affordable, and reliable access to the Internet for as long as we can imagine.

We are curious what the details are - what is the public contributing to this partnership? What is it getting in return? Thus far, we aren't sure.

What we do know is that the Gig.U approach is far preferable to being reliant on Time Warner Cable, at least in the short term. Probably in the medium term. And over the long term, who knows? Communities need to carefully weigh these long term decisions.

New Year, Same Lame Cable and DSL Monopolies

It's a new year, but most of us are still stuck with the same old DSL and cable monopolies. Though many communities have built their own networks to create competition and numerous other benefits, nearly half of the 50 states have enacted legislation to make it harder for communities to build their own networks.

Fortunately, this practice has increasingly come under scrutiny. Unfortunately, we expect to see massive cable and telephone corporations use their unrivaled lobbying power to pass more laws in 2012 like the North Carolina law pushed by Time Warner Cable to essentially stop new community broadband networks.

The FCC's National Broadband Plan calls for all local governments to be free of state barriers (created by big cable and phone companies trying to limit competition). Recommendation 8.19: Congress should make clear that Tribal, state, regional and local governments can build broadband networks.

But modern day railroad barons like Time Warner Cable, AT&T, etc., have a stranglehold on a Congress that depends on their campaign contributions and a national capital built on the lobbying largesse of dominant industries that want to throttle any threats to their businesses. (Hat tip to the Rootstrikers that are trying to fix that mess.)

We occasionally put together a list of notable achievements of these few companies that dominate access to the Internet across the United States. The last one is available here.

FCC Logo

As you read this, remember that the FCC's National Broadband Plan largely places the future of Internet access in the hands of these corporations. On the few occasions the FCC tries to defend the public from their schemes to rip-off broadband subscribers, Republicans (joined by a number of Democrats) threaten to overrule what is supposed to be an independent agency to defend the corporations that just happen to be donors to their campaigns.

Back when most assumed AT&T would be able to push its horribly anti-competitive takeover with T-Mobile through an impotent federal government, a few stories exposed the tip of the iceberg of AT&T's astroturf efforts, as with this report from the Center for Public Integrity:

“It is important that we, as Christians, never stop working on behalf of the underserved and forgotten,” the Rev. R. Henry Martin, director of the clinic, wrote to FCC Chairman Julius Genachowski in June. “It might seem like an out-of-place endorsement, but I am writing today in order to convey our support for the AT&T/T-Mobile merger.”

...

Not included in Martin’s letter to the FCC was the fact that his organization had received a $50,000 donation from AT&T just five months earlier. Indeed the Shreveport-Bossier Mission is one of at least two-dozen charities that were recipients of AT&T’s largesse and have written in support of the T-Mobile buyout, which will cut the number of national wireless companies from four to three.

When AT&T's wasn't able to buy enough influence with legitimate groups willing to sell out the interests of their members (who would pay more for their communications in a less competitive environment), it would simply create its own groups to push its interests:

AT&T Logo

Tallahassee Mayor John Marks brought an Atlanta nonprofit to the city as a partner in a $1.6-million federal-grant project, saying it would put high-speed Internet into the hands of poor people.

What he didn't say, and now says he didn't know, was that the Alliance for Digital Equality (ADE), in its first three years of existence, was nearly 100-percent funded by AT&T and spent most of its money — four of every five dollars — to pay board members, consultants, lawyers and media companies to push the global communication giant's positions on Internet and wireless regulation. Nor did Marks disclose, initially, that ADE had paid him $86,000 over several years as a member of its board of advisers.

We continue to see these massive companies abuse their market power to increase their prices, knowing that their lobbying arms will continue pushing legislation to stop communities from building their own networks.
Time Warner Cable hiked its rates in North Carolina immediately after passing its legislation to stop communities from building networks. Mediacom raised its prices while it attempts to sabotage efforts in rural Minnesota to build networks in unserved areas. And invented new fees to rip off its subscribers while trying to disrupt a rural fiber-to-the-farm initiative that slightly overlapped some territory in which they have long refused to invest.

Even as profits on cable broadband services approach Exxon proportions, Time Warner Cable has pushed for usage-based pricing to further overcharge subscribers, but mostly to strangle enormously popular competitors like Netflix. CenturyLink is not far behind, with usage caps prioritizing its own video content over competitors.

Verizon Wireless tried to sneak a new fee past subscribers by announcing it just before Christmas but backed down after outraged consumers reacted. One has to wonder whether it would have backed down in a world where AT&T took over T-Mobile, resulting in 3 out of 4 wireless customers being with Verizon Wireless and AT&T. Four competitors isn't the robust competition envisioned by Adam Smith, but it still beats the duopoly dynamic that results from even less competition.

Verizon Logo

Speaking of less competition, the recent deal between Verizon and cable companies is troubling. We already knew that FiOS was all but dead, but this deal truly puts a fork in it:

I'll assume that neither cable operators or Verizon are going to let us see the deal fine print to confirm the Times guess, but the logic fits Verizon's strategy. Verizon already cherry picked the most valuable FTTH upgrade markets, and has shown total disinterest in further upgrades. This deal allows them to save money on FTTH upgrade costs, instead soaking up remaining customers with LTE -- which we noted was the plan some time ago. This deal is very bad news to the rural telcos without the cash for large-scale upgrades (CenturyLink, Frontier, Fairpoint, two of which Verizon sold aging DSL networks to), and for satellite broadband providers.

The future of next-generation networks is now only community networks, cooperatives, and some small private networks.

We've long argued that phone and cable companies have systematically overstated their coverage in mapping efforts as part of their effort to blunt any sensible public policy that would result in all Americans having a choice between fast, affordable, and reliable connections to the Internet. The New England disaster called FairPoint is back in the news for overstating the number of subscribers that have access to DSL. The company has not met the requirements it agreed to when purchasing Verizon's lines a few years ago.

Comcast Logo

And in the continuing saga of Comcast's growing domination over the information people can access, Bloomberg TV is fighting Comcast's practice of discriminating against channels in which it has no ownership stake. Comcast has long strongly encouraged those who want to put television channels on its lineup to give Comcast a piece of the action, not unlike a mobster encouraging a small business to pay protection money. It wants to continue expanding its role as a gatekeeper to the Internet, particularly in the many areas where people have no real choice from other high speed providers.

And perhaps the best example of why we should not trust these massive corporations to run essential infrastructure is the revelation that AT&T defunded 9-11 call centers in Tennessee to gain a market advantage over competitors, a practice they were previously caught doing, leading to settlements out of court.

These corporations are not evil, they are following a sensible mandate to maximize their shareholder value. It is our government that is not sensible -- entrusting them with the future of Internet access without even bothering to enact the most basic regulations. Communities must continue to wise up and ensure they have the access they need to modern communications -- access that reponds to their needs, not those of distant shareholders.

Vermont Network Takes Local Ownership to Next Level

Vermont's East Central Fiber-Optic Network (ECFiber) has finished its second round of financing. We noted that the network had exceeded its financing goals at the beginning of this year by raising over $1 million and subsequently began connecting rural homes with its next-generation network. (See all of our ECFiber coverage here.)

The network is now connecting 120 households, a bit below its goal of 164 for the end of the calendar year... but it also had to deal with an unexpected hurricane (Irene) that seriously disrupted the entire state and kept fiber-splicers running ragged.

ECFiber has just completed its second round of financing. While the first round was dominated by a few major investors, the second round had a broader base -- a sign that many in the community have embraced the approach. From the ECFiber press release:

ECFiber is using an innovative funding method to extend its network, supported by local citizens who lend funds that enable build-out to local neighborhoods within and across member towns. Citizens who invest as little as $2500 allow ECFiber to reach all households along designated routes. ECFiber determines where it will build by choosing routes that reach the greatest number of unserved businesses and households, which are then connected to ECFiber’s state-of-the-art fiber-optic service.

These people are literally investing in themselves. ECFiber is an InterLocal Contract with a Governing Board composed of a representiative from each member town (of which there are 23). Investors are purchasing tax exempt 15 year promissory notes that effectively earn 6% interest (due to the one year holiday from interest and principal).

They have raised $340,000 in this round of financing, which will allow the network to pass 60-65% of Barnard's 950 residents. Spokesman Bob Merrill said the network again surpassed its expectations of investor interest and noted that several neighborhoods came on board after one or two interested residents rallied neighbors to invest so they could finally have high-speed connections to the Internet.

The network remains committed to connecting every person in the 23-town area but absent outside financing, it will take another 10 years.

EC Fiber is offering telephone services and Internet access. Though the network does pass some areas where people already have service, ECFiber remains focused on the unserved areas. People in unserved areas presently have to deal with dial-up (over neglected phone lines owned by FairPoint) or satellite connections.

The November-December newsletter offers more details about the network, including the extended battery options that ECFiber offers that will extend the time phones will work in the event of an extended power outage. (FTTH networks do not supply their own power, as do copper telephone lines.)

ECFiber's services and pricing sheet is available here. The prices are higher than those typically found in metro areas, which reflects the higher cost (but not unmanagebly so) of building network in these areas of extremely low density.

A Survey of National Private Sector Broadband Providers

When it comes to expanding access to the Internet across the US, the federal government has long looked first to the private sector, ignoring hundreds of years of experience showing that unaccountable private companies cannot be trusted to sufficiently invest in or govern essential infrastructure.

Inevitably, they price access to high and invest too little as they maxmize their profits -- thereby minimizing the profits of all other parts of the economy.

So let's take a little survey of the progress we see from these companies.

We have long railed against the Verizon -> FairPoint fiasco in New England that left Verizon much richer at the expense of residents and businesses in rural Vermont, New Hampshire, and Maine particularly. Well, FairPoint creditors have realized the depth of Verizon's scam and are suing Verizon for $2 billion. Read the complaint [pdf].

According to the complaint (pdf), Verizon not only made out like a financial bandit up front, but took advantage of regulatory delays to strip mine the assets of anything of value, including core IP network components, business services, and localized billing and support assets required to support the three states. Verizon then billed out their support assistance for millions per month during the very rocky transition, during which time 911 and other services saw repeated outages, resulting in millions more in refund penalties.

Karl Bode is right to criticize the state authorities that allowed this fiasco to occur. Their inability to regulate in the public interest has hurt everyone stuck in the mess. While we can expect powerful companies like Verizon to try to game the system at every opportunity, there is no excuse for making it so easy for them.

Frontier Logo

As long as we are talking about Verizon shedding its rural investments, let's take a look at how Frontier is doing since it inherited thousands upon thousands of FiOS customers as part of its recent deal with Verizon. Frontier has decided the best approach is to transition those customers from the next-generation FTTH network to an older, slower, less reliable, DSL alternative. Find me another country where a major company is moving customers away from fiber-optic connections. This is a national embarrassment.

Rather than investing in better technology, Frontier has literally doubled down on DSL by marketing a second DSL line to customers. Connect one computer to one line and the TV/video game unit to another one. Of course, it turns out they are lying (or incompetent) when it comes to how much they are charging for it...

In other words, that $13.50 1.5 Mbps (if you're lucky) DSL line is actually closer to a $50 1.5 Mbps DSL line once Frontier gets done slamming you with additional fees. These kinds of below-the-line fees have been a mainstay at phone companies for decades, essentially allowing them to engage in false advertising and covertly jack up the advertised price post sale. It's a practice that has yet to see any real attention of regulators, even those ceaselessly professing dedication to "transparency." It helps that Frontier serves a lot of uncompetitive markets where users have no other options, resulting in "deals" like this one.

Let's move on to the nation's largest cable company, Comcast. We recently noted Comcast's dubious distinction as the least trusted company in America. It was simultaneously the second least trusted. I'm guessing we won't see that award plastered on the side of the vehicles their poorly compensated contractors drive around.

Comcast Logo

Occupy Philly, the City of Brotherly Love offshoot of Occupy Wall Street, recently demonstrated at the Comcast Center to bring attention to Comcast's corporate tax dodging. Hey -- I thought Comcast routinely said it wasn't fair that non-profit entities don't pay taxes!

Finally, the big cable companies in general have been singled out in a study showing that Americans lost $38 billion in wages last year while waiting for technicians and delivery people. Cable companies were the worst at making people wait - prompting one person to say "SCAMCAST should be their name."

There is plenty more of examples like the above, but I'm done writing about them today. Just recall that the federal government prefers that this group of unaccountable corporations build, own, and operate the most important utility of the 21st century. We prefer local ownership that is accountable to communities. Time Warner Cable has actually been sued for its terrible customer service!

FairPoint Undermining Broadband Access in Vermont

In an op-ed, Tom Evslin discusses FairPoint and their opposition to a middle mile stimulus grant that would improve broadband access around the state. FairPoint had taken over Verizon's New England lines a few years ago. Verizon had a reputation for poor service but FairPoint took that to new levels before reorganizing under bankruptcy (yet another high-profile private sector failure).

FairPoint fought a middle-mile project in Maine and was eventually bribed into silence by the Legislature. Having learned the only lesson one can learn from such an experience, they are now fighting a middle mile project in Vermont.

Unfortunately FairPoint, the successor to Verizon for landlines in Northern New England, wants Vermont to choose between protecting a badly flawed FairPoint business plan or improving the economic future of Vermont’s rural areas. The choice is stark: use the federal “middle mile” stimulus grant already awarded to the Vermont Telecommunication Authority (VTA) to bring fiber closer to rural Vermonters and make wholesale backhaul and institutional broadband affordable in rural areas of the state or forfeit the grant and leave these areas without adequate business, residential and cellular service.

Vermont should move forward with its stimulus project to expand open access middle mile connections across the state. Appeasing FairPoint yet again is not only bad for Vermont's many underserved, it would further embolden FairPoint in its fight against any competition, public or private.

The VTA was formed to improve broadband access while not providing services directly. There is no reason it should not invest in these middle-mile networks. Quoting again from Evslin op-ed:

Now President of FairPoint in Vermont, Mike Smith said yesterday in an interview broadcast on WCAX that he never meant that the VTA should build fiber networks and provide middle-mile (backhaul) service. He thought it would be directing its efforts to cellular and to retail service. However, Act 79 which Mike was instrumental in getting through the legislature authorizes the VTA “to own, acquire, sell, trade, and lease equipment, facilities, and other infrastructure that could be accessed and used by multiple service providers, the state and local governments, including fiber optic cables, towers, shelters, easements, rights of way, and wireless spectrum of frequencies; provided that any agreement by the authority to sell infrastructure that is capable of use by more than one service provider shall contain conditions that will ensure continued shared use or colocation at reasonable rates“.

Moreover, the Act also says “Nothing in this chapter shall be construed to grant power to the authority to offer the sale of telecommunications services to the public.” In other words, the legislature specifically authorized VTA to be a wholesale provider and specifically forbad it to be a retail provider. The Legislature and the Governor meant the VTA to enable retail service by providing wholesale infrastructure.

FairPoint has been a disaster for Vermont - capitulating to its demands now will only reward it and ensure Vermont's citizens have no other option for the communications services they need.

The Burlington Telecom Mess in Perspective: a Letter to the Community

We are posting another perspective about Burlington Telecom, this time from Tom Streeter, a Professor of Sociology at UVM and author of Selling the Air, The Net Effect and other works about telecommunication.  He circulated this letter in the community and gave us permission to republish it here. Read his original PDF here.

There's no doubt that the Burlington Telecom situation is a serious mess. But in all the accusations and counter-accusations, it can be hard to get some perspective on the nature of the problem. I've been studying things like cable TV, the internet, and telecommunications for most of my career, and I think a sense of the larger picture might help.

First, nobody has been accused of lining their private pockets with public money. There is nothing about the current scandal reminiscent of the one surrounding BT's former legal antagonist Adelphia Cable, whose CEO is still cooling his heels in jail for essentially stealing from his own company. Second, Burlington Telecom is hardly alone in having a hard time paying the bills. Vermont's primary telephone service provider, Fairpoint, filed for bankruptcy late in 2009, and cable providers nationwide are scrambling for ways to stay alive nationwide in the face of the first annual decline in cable subscriptions in the industry's history. Times are extremely tough throughout the industry, and the fact that BT is in a financial tight spot is by itself hardly surprising.

Another thing about telecommunications is that it is an infrastructure business. Like roads, bridges, and sewers, you have to build most of the thing to completion before you get the benefit; no one will pay the toll for a bridge that goes halfway across the river. So you have to spend the money up front in hopes of making the money back years into the future, a future which is impossible to know with certainty. BT had to spend the money to build the system – the fiber optic lines, the home installations, the controlling equipment – based on a guess of what the revenues would be many years down the road. There's a basic uncertainty in infrastructure construction, then, and the constantly changing world of high tech compounds the problem. There are better and worse guesses, but speaking as though revenue and cost estimates for 2010 could have been made with absolute certainty in 2005 is asking for the impossible.

Some accuse BT's first manager Tim Nulty of having been a charismatic pied piper who presented overly rosy revenue projections, but the same could be said for Steve Jobs – for all his successes like the iPhone he's got a long string of failures to his name as well – and he is one of the most admired business managers in the world. It takes a mixture of vision, charisma, and judgment to get any big project like this off the ground, and hindsight will always be able to find some errors in the early stages of a project. The debates between Nulty and the Kiss administration that led to Nulty's resignation – Kiss and Leopold wanted to move cautiously and work towards making the existing system self-sustaining, Nulty wanted to invest more in marketing and building out in order to grow the subscriber base – should be seen in the first instance as different judgments between reasonable people about how to deal with a fundamentally uncertain situation. Maybe if you look at it carefully you might conclude that one side has been more right than the other, but if you think it's black-and-white, if you think the answer is obvious, you don't understand the issue.

The inevitable uncertainty that comes with high tech projects means that the history of communication systems is strewn with expensive mistakes much worse than BT's. Back in about 2005 when BT was getting its start, many cities (e.g., Philadelphia, Chicago) were guessing that city-wide Wi-Fi systems were the way to go, and have since had to scale back or abandon their efforts. Mobile phone companies at the time were investing huge sums on the theory that consumers would pay handsomely to watch short video clips of news and sports events on tiny phone screens (this was before the iPhone and YouTube sent consumers straight to the internet to get such things for free). More recently, global TV set manufacturers seem to have made a bad bet on the hope that everyone would pay for expensive 3D television sets. Expensive bad guesses come with the territory.

BT Logo

Which is why it needs be said that, five years down the road, BT remains a pretty good idea. It has not met its original targets for profitability – given the economic climate, the same is true for almost the entire industry – but Burlington now has a durable, highly flexible state-of-the-art fiber-to-the-home system that can deliver both existing services and be easily adopted to future trends. It's quite valuable; it provides services that people want now and will want and pay for in the future, and makes Burlington more inviting to citizens and businesses. Like everyone else, BT did fail to anticipate the financial downturn, which in turn caused subscribers to scale back on extra services like premium cable channels (throughout the industry, the best source of revenues). And it ran into technical difficulties installing cables in certain neighborhoods and a few other hiccups. In the larger scheme of things, these are problems, but not signs of gross negligence. When the City of Burlington set out to build BT, we can now say it made a reasonably good bet.

So what's the problem now? The tragedy of BT is not that it was a bad idea to begin with or that one could have foreseen all of the difficulties it now faces. Rather, the current mess is a product of a perfect storm of a difficult financial landscape with a fatal political misjudgment. Publicly run utilities often work well; Burlington Electric is by some measures the best run electric provider in the State. But, because they are publicly owned, they come with a higher expectation of transparency and public understanding. The Kiss administration seems to have forgotten that. "Trust us" may work in the private sector, but for a public enterprise, even a supposedly self-sustaining one, that's not enough. When the Kiss administration was looking for ways to deal with BT's financial shortfalls, whether or not what they did was illegal, they should have gone fully public. They should have seen it as their job, not just to solve the problem, but to build public understanding and support for a solution that was both financially and politically acceptable. If journalists or skeptical City Council members did not understand, the overwhelming concern should have been turning that understanding around immediately. "It's easier to beg forgiveness than to ask for permission" does not apply to publicly owned enterprises. True, the Burlington Free Press has a long history of attacking Progressive politicians, so the Freep should not be mistaken for the public at large. But that is no excuse for ignoring a broad sense of public concern. Kiss's approach, which has boiled down to inarticulate claims of innocence with very little effort to effectively communicate both the nature of the problems and the solutions, has created a vacuum of public understanding which has been filled with politicized maneuvering, recriminations, and overheated "gotcha" journalistic coverage.

Politicians and the press should be focusing now on efforts to find practical ways to maintain Burlington Telecom in some form. Investigations should go forward with an eye towards solving the problem, not just finding guilty parties to blame. The financial complexities of BTs relationship to banks and the City need to be scrutinized with an eye towards getting things back on a sound footing while taking into account the inevitable uncertainties and long-term nature of this kind of project; patience will be required for any solution to work. But the lesson learned is that both financial solvency and public legitimacy have to be part of the solution; in fact, each requires the other. And for public legitimacy to be restored, at this point it is clear that new management needs to be brought in, regardless of what one thinks of past management.

But the Kiss administration, and the Progressive community in general, need to face up to the fact that the whole thing has been handled in a politically disastrous way. I helped campaign for Bob Kiss in his first run for mayor, and it saddens me deeply that this mess has delivered a serious blow to the Progressive moment in Burlington, damaging three decades of carefully built trust and good will, nearly guaranteeing that Progressives will have a much harder time getting elected in the foreseeable future. The Progressive movement is founded on a belief in democratic involvement in decisions that affect us all; by loosing sight of the role of leadership in generating and adopting to the public understanding necessary for that involvement, the Mayor's office has shot itself in the foot, and caused us all some pain.

Tom Streeter

FairPoint Continues Fight Against Competition in Maine

Light Reading took an in-depth look at FairPoint's anti-competition, anti-public ownership lobbying in Maine, where it is fighting a stimulus award to a consortium that includes a public entity. We have previously covered goings-on in Maine where FairPoint is involved due to their terrible track record of offering services while pushing for rules that would prevent communities from building their own networks.

For those who are not familiar, FairPoint had bought the lines from Verizon as part of a tax-dodge called the "Reverse Morris Trust" (one loophole that might be closed before Verizon can abuse it again). FairPoint promptly went bankrupt, but not before screwing up service for thousands upon thousands of residents and businesses in New England (from months of screwed-up billing to weeks without telecom services). Now FairPoint wants to make sure many Maine residents have no choice in providers for the foreseeable future.

Carol Wilson's look at this situation is fairly comprehensive.

... Maine Fiber Co., won a $25.4 million grant to build what is called the Three-Ring Binder, an middle-mile fiber optic network that will include three fiber rings in Western, Northern, and Downeast Maine. Maine Fiber’s intent is to lease dark fiber as an open access network, and not to sell commercial services.

More details about the Three Ring Binder are available here and here.

The Maine Fiber Company is a private sector entity that has partnered with the University of Maine System. Though the company will run the network, some fibers will be reserved for the schools - this is a common private-public partnership that is mutually beneficial. This network will be open access - meaning that all can use it on equal terms (as opposed to being monopolized solely by the owner, as FairPoint does with its network). But FairPoint sure doesn't want to deal with competition in the many areas that it currently monopolizes with poor service at high prices.

It [Three Ring Binder Network] is now facing a challenge from FairPoint Communications Inc. , which bought Verizon’s networks in Maine, New Hampshire, and Vermont, and has gotten a bill introduced in the state legislature prohibiting the state and state-owned divisions from providing telecom services to non-state entities.

Fortunately, the bill does not look like it will succeed.

The spokesman for FairPoint is quick to say they are not against competition... just as 100% of all incumbents do -- claiming to be for competition even as they do everything they can to preserve their monopoly power.

He asserts that Fairpoint won’t lease dark fiber because it is against company policy to do so. “We want people on our network.”

Of course they want people on their network! This is the modern paradigm for telecom companies - they use the ownership of a wire to own the customer. Such an approach great for telecom profits but leaves the rest of us disadvantaged relative to the rest of the developed world; they have smartly used government policy to break telecom monopolies -- either by regulating in the public interest (unbundling) or by building infrastructure that puts communities before profits.

Associate Communications and Network Services Director for the University of Maine explains that they can no longer wait for FairPoint:

“High-speed broadband access is center to our mission, there is no way you can get around it these days,” Letourneau says. “We went through half a dozen years where our research was being held back because a couple of private companies weren’t willing or able to make the investment in the infrastructure. We can’t ever be in that position again. We are probably the last region in the country to do this. We are not being cutting edge here -- we are just keeping up with the Joneses.”

FairPoint responds to the fact that its rates are too high:

Nevins concedes that Fairpoint’s rates are probably higher -- but that’s because Fairpoint isn’t getting tax dollars to build its network and must recover its investment in the marketplace.

This is absolute crap - networks in rural areas are heavily subsidized by a federal program called the Universal Service Fund. FairPoint's argument is essentially that a government that is subsidizing its services should not also subsidize another network that will compete with it. And on this, we can agree. Government programs that subsidize bad-actor private companies like FairPoint should be abolished. We must stop subsidizing their profits while they refuse to offer affordable prices and the speeds communities need. Further, any network receiving public money should be open to competitors on an open access basis because our tax dollars should not go to unaccountable monopolies.

As one of the commenters on that story noted:

Maine has a choice: Have the best middle-mile network in the country or have one of the worst, and forever be like a third-world country off on a remote edge of the continent.

Actually, most communities have this choice.

Folks in Maine Resent FairPoint's Lobbying Against Broadband Awards

As Karl Bode recently asked, "Should Fairpoint Really Be Giving Broadband Advice?" They have been lobbying against other stimulus projects in Maine that could allow FairPoint subscribers to actually get service that works and puts communities first.

Given FairPoint's horrendous track record in New England since taking over Verizon's run-down network, I'm glad to see a local paper taking them to task for their attempts to deny broadband to significant swaths of the state.

FairPoint is demanding that Maine law prevent the university from selling access to its network to any customer outside the governmental sector. Instead, those customers would have to take their business to FairPoint.

If FairPoint could take care of the customers it already has, and if it was keeping up with its promises to serve more of the state with high-speed Internet, it might have a stronger case.

People in Maine need to realize they will remain behind in network infrastructure so long as they depend on companies like FairPoint rather than the old New England values of self-reliance. Absent public competition, FairPoint will remain the only "option" because no private provider will find profits competing in these rural areas.

Verizon Actions Show Carriers Will Not Wire Rural America

In a recent post the NY Times Bits Blog, Saul Hansell reports "Verizon Boss Hangs Up on Landline Phone Business" - something we have long known. Nonetheless, this makes it even more official: private companies have no interest in bringing true broadband to everyone in the United States.

Verizon is happy to invest in next-generation networks in wealthy suburbs and large metro regions but people in rural areas - who have long dealt with decaying telephone infrastructure - will be lucky to get slow DSL speeds that leave them unable to participate in the digital age. These people will be spun off to other companies so Verizon can focus on the most profitable areas.

For instance, Verizon found it profitable to spin off its customers in Hawaii to another company that quickly ran into trouble before unloading most of its New England customer on FairPoint, moves that enhanced Verizon's bottom line while harming many communities (see the bottom of this post and other posts about FairPoint).

Isen has been writing about it recently - picking up on FairPoint immediately breaking its promises to expand broadband access in the newly acquired territories. No surprise there.

Isen also delved deeper into Verizon's actions, with "Verizon throws 18 states under the progress train." He is right to push this as a national story - the national media focused intently on the absence of major carriers in the broadband stimulus package but they seem utterly uninterested in major carriers running away from broadband investments in rural areas.

Though Frontier likes to position itself as a company focused on bringing broadband to rural areas, it offers slow DSL broadband and poor customer service to people who have no other choices - more of a parasite than angel. As long as we view broadband as a vehicle for moving profits from communities to absentee-owned corporations rather than the infrastructure it truly is, we will farther and farther behind our international peers in the modern economy.

Perhaps the most frustrating angle of these transactions are the many ways in which Verizon benefits from stranding thousands of communities. West Virginia is one of the states most impacted by the proposed Verizon-Frontier swap and has generated in-depth coverage of the story.

She [Elaine Harris of Communications Workers of America (telephone employees union)] believes the payoff for Verizon is it cannot only make money selling off its assets, but it can take advantage of a federal tax loophole that allows tax-free mergers between companies. The smaller companies are left saddled with debt and, as a result, can't make the necessary upgrades to existing infrastructure, turning off customers and ultimately leading to work force reductions as dissatisfied customers turn somewhere else.

Trying to figure out how to force absentee-owned, profit-maximizing corporations to bring true broadband to everyone ignores the reality of our market system: we are trying to force the square peg through the round hole. These companies may well invest in urban and suburban areas (though these areas continue to fall behind major cities elsewhere in the world) but they have no reason to invest in rural America. To get the job done, we need smart public investments to ensure everyone benefits from the communications revolution.

When we expanded telephone and electrical infrastructure to everyone, everyone in the United States benefited because networks always become more valuable as they increase in size. More people on the network means increased markets, increased productivity, and a higher quality of life.

Ensuring everyone has quality broadband is not charity for rural folks, it is in all of our self-interest. The narrow self-interests of Verizon, Frontier, and FairPoint (this is not a shot at them, companies are designed to have a narrow self-interest for legitimate reasons) do not line up with our larger national interest - something that too few people understand when dealing with broadband policy.

This is a video offering good coverage of the FairPoint problems:

Photo by Derek Jensen, used under creative commons license.