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Local Businesses Suffer in Tennessee as State Prevents Chattanooga Expansion

As our readers know, the FCC is currently considering petitions submitted by Chattanooga and Wilson, North Carolina. Both communities want the ability to expand their ability to offer advanced telecommunications services, contrary to existing state anti-muni laws. As we glance through the comments, we notice that ISPs, advocacy groups, and local governments are not the only commenters with a vested interest in the outcome. 

There are also compelling stories from individuals, local businesses, and organizations that are looking for better options. In some cases they have one provider but are unhappy with the service so support municipal network expansion. In other cases, they have dial-up (or no service at all) and are maddeningly close to an EPB or Greenlight connection but state restrictions forbid service to them.

We recently spoke with Joyce Coltrin, owner of J & J Nursery located on the edge of Cleveland, Tennessee, in Bradley County. She is about 32 miles from the heart of Chattanooga but only 3/8 mile from the edge of the EPB fiber optic service area. Her only choice for Internet at her nursery is AT&T dial-up. Joyce tells us:

"I could walk right to it - it is the closest provider and we don't have any broadband access!"

Joyce submitted comments early in the proceedings. She choose to send her comments via snail mail because her email is so unreliable.

For the past 15 years, Joyce and other people in her community have requested better service from AT&T. They were told repeatedly it would be 3 months, 6 months, 9 months until they would get upgrades but it never happened. They finally decided to look for connectivity elsewhere. Joyce and her neighbors approached their electric provider, Volunteer Energy Cooperative, in the hopes that they could work with EPB to bring services to the area. Volunteer and EPB had already discussed the possibility, but when the state law was passed that prevented EPB from expanding, the efforts to collaborate cooled.

Joyce uses her cell phone to access the Internet while she is at work. Like some of the other business owners in Cleveland, Joyce pays $200 - $300 per month because she is constantly running over data caps to conduct business. There are others who live or work in areas near her that do not have cell phone coverage.

Another local business owner that runs a poultry business almost lost a large number of chicks when their alarm system, dependent on wireless Internet access through a Verizon "MiFi" personal hotspot, failed during cold weather.

Joyce does not plan on expanding to an online store but she finds it difficult to adhere to state business regulations without better connectivity. For instance, she must do business taxes online from home, where she has a little better Internet access.

She knows that Tennessee's anti-muni laws came from giant cable and telco lobbying efforts. She also recognizes the negative impact it is having on Cleveland. In her comments to the FCC, Joyce writes:

College students drive to McDonald's to use Wi-Fi and work from their cars to do homework and projects. This situation is choking business and making our children third class citizens.

I have always been for free enterprise, but when some businesses win due to unfair protection, free enterprise dies.

To read the rest of Joyce's comments, visit the FCC website.

Community Broadband Media Roundup - September 19, 2014

The media is picking up on Chairman Wheeler’s notice to big telecom: 4Mbps is not going to cut it anymore. Wheeler said speeds closer to 10Mbps should be classified as high speed. A good step, but by the end of this Media Roundup, you’ll be questioning what that paltry 10 Mbps can do for communities…

Michael Nielsen with Motley Fool pointed out reasons that big telecom should be scared: competition, competition, competition. Meanwhile, AT&T patted itself on the back because they say 98% of its customers have download speeds of 6 Mbps or higher (so they claim). So yes, congratulations are in order, in the most minor way possible. 

Want another reason big telecom should be scared? Free Marketeers are on board with Net Neutrality. From James J. Heaney: 

“… it seems odd for a conservative – whether an old-guard big-business Bush-era conservative or a new-guard Paulite libertarian conservative – to support Net Neutrality.

Except I do Internet for a living, and I am one of the lucky ones who actually knows what Net Neutrality means and what it’s responding to.  And, folks, I’m afraid that, while L. Gordon Crovitz and Rich Lowry are great pundits with a clear understanding of how Washington and the economy work, they don’t seem to understand how the Internet works, which has led them to some wrong conclusions.”

AT&T/DirecTV Merger:

Ars Technica’s Jon Brodkin reported on our comments about the AT&T/DirecTV merger, noting what the merger could mean for aging infrastructure:

“AT&T’s proposed $48.5 billion acquisition of DirecTV will reduce competition for TV subscribers, increase AT&T’s “incentive to discriminate against online video services,” and give AT&T more reasons to neglect its aging copper network, consumer advocacy groups argue in a petition to deny the merger.”

The Hill also published an article citing ILSR and Public Knowledge’s comments:

‘"[the organizations] told the agency in a petition that the merger would be bad for consumers, especially against the backdrop of other media deals such as Comcast’s bid to buy Time Warner Cable. “Companies may think they need greater scale to enter new markets or keep up with their rivals. But unless they can show how this would benefit consumers, it is immaterial,” they wrote. “If anything, the FCC should be more skeptical of mergers that come in waves, since in the aggregate consumers suffer from a more highly concentrated, centralized marketplace, with fewer choices, homogenous offerings and increased likelihood of coordinated effects.”’

Internet Access Competition Update:

Did you know that communities that have a service provider that offers a 1 Gig service have a per capita GDP that’s 1.1 percent higher than other communities that have little or no gigabit services? That’s the report from Sean Buckley on Fierce Telecom this week.

But cities that didn’t win the “gigabit google lottery” are taking action on their own. According to Denise Linn of Next City, Louisiville has identified three companies that will invest in a gig in areas of town. 

“Though Louisville’s future network will not be supported with public funds (in contrast to projects in Wilson, North Carolina or Lafayette, Louisiana, for example), initial momentum certainly came from the bottom up. Demand for faster speeds was fostered and articulated by the city’s residents, academics and the business community.”

Of course we think a publicly-owned network is a better bet for the city, but this is a good step.

Meantime, a conference on gigabit networks sparked three communities in Connecticut to explore their options. They modeled their request after Louisville.  Fierce Telecom and The Westminster Dispatch had the story: 

"As soon as we started the conversation about gig networks, we heard from businesses, universities, high-tech start-ups, mayors and first selectmen – really such a variety of stakeholders – about how greater Internet speeds at lower costs are essential to their functioning," Katz said in a West Hartford Patch article. "We knew it was an important economic development tool, but we've learned gig networks are also essential for medicine, precision manufacturing, education, e-government, many different people in different sectors clamoring for gig networks."

Jason Myers reported that the initiative is “open to any and all municipalities in Connecticut." Organizers hope that network partners will be encouraged by more cities joining the initiative. 

Big News from the land of 10,000 lakes: Joan Engebretson reported in Next City that Paul Bunyan Communications — a co-op in Northern Minnesota will be home to the nation’s largest public gigabit service as early as 2015. The “GigaZone” will cover about five thousand square miles. 

“Expanding broadband is a great equalizing force for boosting rural economies. Today you don't need to live off a major highway or in a bustling city to find a good job, start a new business, or get a high quality education but today you do need a high-speed Internet connection," said Senator Amy Klobuchar, who has championed the effort of rural broadband access at the national level since being elected.”

Seattle’s new Chief Technology Officer has broadband on his mind. GovTech profiled Michael Mattmiller this week

“The Federal Communication Commission is now considering altering the definition of broadband Internet -- increasing the speed from 4 Mbps to 10 Mbps. For a city to keep up with the changing standards, it must consider new avenues, Mattmiller said, like eliminating red tape. The city council is now reviewing proposed changes to the Seattle Department of Transportation’sDirector’s Rule 2-2009, which made it difficult for broadband providers besides Comcast to develop their networks in the city.”

And finally, we thought Santa Monica’s public network was fast before— now they’re raising the bar yet again. The city now boasts a 100 Gigabit per second fiber network.

“This is only the latest milestone in a long line of advancements Santa Monica has made in the broadband arena. We are considered a leader in social tech and have leveraged our fiber optic network to advance free Wi-Fi in public parks and major bus routes, provide internet to our libraries, and connect our schools and college locations. These efforts have contributed to education, economic development, and provide impressive Internet speeds for large conferences and events. We are proud to be the 1st, 100 Gigabit municipal network in the U.S.,” said Jory Wolf, the City of Santa Monica’s Chief Information Officer.

Let that sink in.

Community Broadband Media Roundup - September 12

This week, you might have been tripped up by some infuriating “spinning wheels of death” on the Internet, but don’t worry, the slow-down was largely symbolic— at least for now. Fierce Telecom covered the Internet Slowdown Day protest on Wednesday, organized by “Battle for the Net." It was designed to bring attention to what will happen if so-called “slow lanes” are allowed under new FCC net neutrality rules. 

Netflix, MuniNetworks, Kickstarter, Reddit, and thousands of other sites took part in the protest. “The New Yorker’s” Vauhini Vara writes that Internet Slowdown Day produced more than 700 thousand comments about proposed FCC rules. 

Meanwhile, Amazon is positioning itself to come out on top whichever way the Net Neutrality rules fall. Susan Crawford urged the FCC to take action and “Think Chattanooga.”

“This is not a story of huge companies fighting one another. This is a sweeping narrative of private control over the central utility of our era: high-capacity Internet access. We, the people of the United States, are the collateral damage in this battle; we are stuck with second-class, expensive service.”

Muni Networks are gaining more ground, with Chattanooga and Wilson, NC still in the spotlight. Anne L. Kim took up the issue of preemption on CQ Roll Call. She interviewed Chris Mitchell for the article:

“Communities build their own networks because they think the private sector isn’t investing in them, said Christopher Mitchell… According to Mitchell, in the case of city-wide municipal fiber networks, reasons for deployment are often a mix of getting fast, reliable service at an affordable price.”

Blogger KateCA of My FireDogLake commented on the failings of the invisible hand in the telecom realm in her Corporations and The Commons post. 

“While free enterprise usually merits a hearty rah-rah in certain circles, competition between for-profit entities and publicly-owned ones seems to be a no-no, at least to Rep Blackburn and her crowd when it comes to [Chatanooga’s] EPB.”

In The New York Times, Colin Dougherty laments the search for a killer app in cities where Google Fiber has set down roots. He talked to Chris Mitchell and other experts about the difference between local control and dependence on a corporation like Google:

“It felt like a righteous invading tech company coming in to tell us how to run the city,” he said. Faster Internet helps Google in lots of ways."

The more time users spend searching the web or watching YouTube videos, the more ads Google sells and the more Google services people use. The company could also use Fiber to test new services like household-targeted TV commercials.

As FCC Chairman Tom Wheeler announced his intention to address barriers to competition and broadband deployment, several reporters, including Stephen Hardy of Lightwave Online wrote on the topic.

Regarding the definition of broadband, Ars Technica’s Jon Brodkin and Fierce Telecom’s Sean Buckley wrote that AT&T, Verizon, and others made claims that consumers simply don’t need or want faster Internet speeds.

"Consumer behavior strongly reinforces the conclusion that a 10 Mbps service exceeds what many Americans need today to enable basic, high-quality transmissions," AT&T wrote in a filing. 

AT&T’s comments were made public after Wheeler mentioned that the current definition for broadband is much slower than is necessary for economic growth.  

Casey Houser suggests that gig networks are forcing big telecom to play a game of “anything you can do I can do better”. But many communities are not waiting around for the big guys to come in. More announced this week they are dipping their collective toes into the municipal broadband pool. 

Lexington, KY mayor Jim Gray says he’s moving forward to give his city a big gig push. 

Austin, MN’s Vision 2020 group is studying how it can get its own gig, after being passed over by Google Fiber three years ago. The Daily Herald’s Trey Mewes reports that the group will be going door-to-door to get feedback about the Gig Austin proposal.

Finally, a recent article in The Advertiser counters some false statements made by a paid muni network hit man. Lafayette Utilities System (LUS) director Terry Huval said a report published by “Reason”, and written by Steven Titch is extremely flawed and biased. 

“Steven Titch, a paid analyst, and formerly a news editor in the telecommunications industry, has been criticizing LUS Fiber and other municipal broadband systems for virtually the past decade,” Huval wrote in response to the report. He takes data and twists it in a way that meets the particular needs of that client,” he said. “The bottom line for us is we are doing well. We are growing every year.”

Community Broadband Media Roundup - September 6

Chairman Wheeler chose the 1776 start-up incubator office as the backdrop for his comments Thursday that outline a new agenda for big telecom: Competition, Competition, Competition.

IDG News Service Grant Gross reported on the chairman's comments.

"At the low end of throughput ... the majority of Americans have a choice of only two providers," Wheeler said. "That is what economists call a duopoly, a marketplace that is typically characterized by less than vibrant competition."

Wheeler unveiled a new broadband competition agenda, which charges the FCC to:

  • Protect competition - including generally opposing merger efforts...
  • Encourage competition - including opening up new spectrum...
  • Work to create new competitors - in a place where "meaningful" competition is not available.

Time magazine's Haley Sweetland Edwards wrote that critics will believe it when they see it: 

But it seemed to some consumer advocates to be disingenuous in a climate where the FCC is widely expected approve of a massive planned merger between Comcast and Time Warner Cable in the next six months.“The real proof will be in the agency’s actions and not just its speeches,” wrote advocacy group Free Press’ policy director, Matt Wood, in a prepared statement.

The Switch's Brian Fung noted that Wheeler kept specifics to a minimum but, 

"He emphasized that the FCC would continue extending broadband to rural areas by supporting "whomever steps up to the challenge" — a veiled reference to competitive entities, such as city governments, seeking to challenge large, incumbent ISPs."

Last week’s FCC deadline for Chattanooga, TN and Wilson, NC petitions made for a treasure trove of broadband-related media hits last weekend and into this week.

First things first, we've said it before and we'll say it again. Allan Holmes with the Center for Public Integrity wrote a must-read. "How Big Telecom Smothers City-Run Broadband" is insightful, in-depth, and really explains how we've gotten to where we are now in this national fight. 

Ellis Smith offers a human element to this issue:

When Joyce Coltrin looks outside the front door of her wholesale plant business, her gaze stops at a spot less than a half mile away.

All she can do is stare in disbelief at the spot in rural Bradley County where access to EPB's fiber-optic service abruptly halts, as mandated under a Tennessee law that has frozen the expansion of the fastest Internet in the Western Hemisphere.

And Dominic Rushe of The Guardian quotes our own Chris Mitchell:

It’s a story that is being watched very closely by Big Cable’s critics. “In DC there is often an attitude that the only way to solve our problems is to hand them over to big business. Chattanooga is a reminder that the best solutions are often local and work out better than handing over control to Comcast or AT&T to do whatever they want with us.” 

On Friday, USTelecom, which represents the Big Cable Duopoly wrote wrote a little blog post on the subject, The Inquisitr.com helped translate:

"If cities are allowed to expand their own broadband, it could force Comcast and Time Warner to stop practices like data throttling that squeeze businesses, such as Netflix that have grown successful playing by the rules. Netflix recently agreed to pay Comcast a toll to keep from losing additional customers over the black hat practice of slowing down content that users are already paying for."

The Verge's Jacob Kastrenakes covered the filing and blog post. He states that the industry giants argue the FCC simply doesn't have the power to preempt state law.

While USTelecom is right that some public broadband networks have turned into blunders, many have been incredibly successful and have actually proven to be legitimate competitors to private networks. 

AT&T filed its petition Friday as well, arguing that municipal networks should not be given tax breaks, but of course they make no such claim for companies like themselves. 

Ars Technica’s Jon Brodkin wrote about the doublespeak Tuesday:

“’Community broadband networks “should not receive any preferential tax treatment,” AT&T argued. Only private companies should be given special treatment, the company said. “Indeed, any tax incentives or exemptions should be provided, if at all, to private sector firms to induce them to expand broadband deployment to unserved areas,’ AT&T wrote.”

Several other journalists echoed his reporting.

IDG News Service's Grant Gross reported on several petitioners, including Todd Patton, of North Carolina:

"There is very little competition for broadband services in most areas today, leaving consumers at the mercy of a small handful of huge multi-national corporations like Time Warner Cable and AT&T to raise prices as they see fit," he wrote. "Municipal broadband offers consumers an affordable choice and often at higher speeds than the big corporations choose to offer." 

The Electronista and Brittany Hillen from Smash Gear noted that AT&T argues that allowing muni networks to exist would make private companies operate at a disadvantage.

Meanwhile, Sam Gustin from Motherboard spoke with one tech expert that noted the irony:

“You almost have to admire AT&T’s chutzpah in saying that, given the concessions they wrung out of communities over the years for promised AT&T broadband deployments that never even materialized,” said Lauren Weinstein, a veteran tech policy expert who supports community broadband initiatives. 

AT&T reported more than $18 billion in net income in 2013. . .

Brad Reed from BGR’s story got picked up by YahooNews. He wrote that AT&T argued it simply shouldn’t have to compete with municipal broadband networks in places where they offer 6Mbps or greater, “even if the municipal network would deliver speeds of 1Gbps or higher for it’s users.”

And DSLReports added a little history to the mix, reminding us of AT&T’s polls that insinuated that muni networks would result in pornography and government rationing of TV usage. 

AT&T wasn’t the only company that filed a letter to the FCC. Netflix also joined the preemption fray. The streaming giant filed its comments Tuesday, saying, 

"Federal preemption is appropriate when state laws unduly interfere with municipal broadband."

Because we follow the good, the bad, and the ugly, we have to mention some misguided politicians with the National Association of Governors. 

RBR.com (which regards itself as “The Voice of the Broadcasting Industry”) brought up claims that state sovereignty is the real issue, and the “FCC has no right to supersede any federal, state, or local law.” 

And Eric Boehm of Watchdog.org, an arm of the Center for public integrity noted:

“The local governments say they want to grow the taxpayer-funding, public Internet access to compete with Internet giants like Comcast.

Essentially, they are asking their biggest brother — the federal government — to back them up in a fight with their bigger brothers in state government.”

Again we note the double-speak. Boehm first argues that muni networks would be too difficult to compete with for private companies, and then calls them out as "boondoggles.” We encourage these organizations to at least try to get their stories straight before they hit the big red “publish” button. 

A couple of cities are announcing their interest in city-owned broadband. 

First posted in The Coloradoan and also covered by InnovationNews: Fort Collins city manager Darin Atteberry announced a Broadband Strategic Plan proposal as part of his 2015-2016 budget. 

Atteberry said the proposal is in response to citizen comments about slow Internet speeds in the city and new, next-generation high-speed Internet services becoming available across the nation.

More Syracuse officials are announcing their support of a city-owned network. Nader Maroun, a Syracuse Common Council member says Syracuse MetroNet has been actively involved in researching how a network could be run in the city:

Significantly, this municipal network would not involve any local public funding nor would it be built and managed by the city. Instead it would be created by a new nonprofit organization specifically tasked for this purpose. Since Dr. Nulty's study, we have been exploring ways in which such a network might be financed, built and managed.

Community Broadband Media Roundup - Week of August 29, 2014

"When private industry does not answer the call because of market failures or other obstacles, it is appropriate and even commendable, for the people acting through their local governments to improve their lives by investing in their own future."

~ John McCain, 2005

Wait. What? Brendan Sasso from The National Journal brought up some excellent points this week-- some things we’ve been pondering for a good long while.

Why would so many republican lawmakers who claim to value self-determination and self-rule deny citizens the right to take on Big Telecom? Why would Republicans who rally for smaller government and healthy competition turn around and argue that the State should step in and bar citizens from having their basic broadband needs met?

That quote from Sen. John McCain was spoken when McCain and a bipartisan group of senators (Republicans John McCain, Lindsey Graham, and Norm Coleman and Democrats Frank Lautenberg, John Kerry, and Russ Feingold) introduced a bill to block states from restricting local governments' ability to provide publicly run and funded Internet service. It can be explained pretty simply, According to Sasso: 

“President Obama has taken a position on the issue this time around. That’s why 11 Republican senators are “deeply troubled” that the FCC would "force taxpayer funded competition against private broadband providers."

Municipal Broadband got a shot in the arm this week from the Center for Public Integrity as well. Allan Holmes wrote extensively about how Big Telecom spends millions of dollars in litigation, advertising and lobbying “instead of investing in improving infrastructure in these communities.” 

“On a scale of 1 to 10 on who is the most powerful lobbying presence in Tennessee, AT&T is a 12,” said a long-time lobbyist in Nashville who asked not to be identified so he could speak candidly about lobbying in the state. “They are the big horse in the race, and they are unstoppable.”

AT&T and its president of Tennessee operations Joelle Phillips didn’t respond to CPI emails asking for comment, but Alex Wilhelm of TechCrunch definitely added his own thoughts. He outlines some of his concerns:  

“Increasing competition is good. Helping bring more American citizens onto the Internet at high speeds is good. And it is especially good to bring quick digital access to the world’s information to rural areas that are not currently served by private enterprise. As such, there is a place for municipal broadband in America.

More broadly, if citizens want to come together and build a service for themselves using monies that they elect to raise, they should be able to. I struggle to understand how that idea is controversial.”

The initial comments period for the Time Warner merger plan came to an end Friday. Before it closed, ILSR and 64 other reform groups made their voices heard. Value Walk staff reprinted our comments, the basis of the argument is this:

“The merger would give Comcast too much control over the future of the Internet and communications infrastructure and undermine the diversity of ownership and content in media.” 

We couldn’t have said it better ourselves…

Center for Public Integrity Covers Big Telecom Attacks on Munis

The Center for Public Integrity recently published an excellent article worth sharing. In "How big telecom smothers city-run broadband," Allan Holmes describes the money-for-infleunce machine at the state level, connects the dollars, and reveals bedfellows. The article is part of a series investigating the political power of big cable and telecom companies.

If you are a regular at MuniNetworks.org or any other news source covering telecommunications, you are familiar with the renewed push to restore local telecommunications authority that began in January of this year. Holmes provides a little background on the court case that inspired FCC Chairman Wheeler to publicly state that the agency is serious about restoring local authority.

Since those developments, an increasing number of journalists have reported on how we came to have barriers to municipal networks in some 20 states. The revived interest has further revealed that state legislatures are big benefactors of campaign contributions from cable and telecom leaders. "Think tanks" aimed at protecting industry giants and conservative millionaires prove to be at the heart of this payola. Holmes does an excellent job of simplifying the web of political influen$e that dooms millions of people to dial-up, outdated DSL, and aging cable infrastructure.

Holmes follows the story of Janice Bowling, a state senator from Tennessee representing the district that is home to LightTUBe in Tullahoma. When she introduced a bill to allow LightTUBe to expand to serve surrounding communities, she did so because:

…I believe in capitalism and the free market. But when they won’t come in, then Tennesseans have an obligation to do it themselves.

When it appeared the bill might get some traction:

That’s when Joelle Phillips, president of AT&T’s Tennessee operations, leaned toward her across the table in a conference room next to the House caucus leader’s office and said tersely, “Well, I’d hate for this to end up in litigation,” Bowling recalls.

Holmes delves into the Herculean efforts by incumbents to quash municipal network projects in other communities, such as Lafayette, Louisiana. Millions of dollars have been spent on lobbying and lawsuits instead of upgrades to improve services or connect more potential customers.

For the next three years, Lafayette spent $4 million responding to three lawsuits and subsequent appeals from BellSouth, which AT&T bought in 2006, and Cox.

The article addresses the fact that better connectivity leads to better economic development. This is only one of many stories from Tullahoma:

Agisent Technologies Inc., which provides online records management for police departments and city jails, moved to Tullahoma in 2011 because it needed a fast reliable broadband network that had a backup if the connection failed, said David Lufty, the company’s president.

Charter and AT&T couldn’t offer redundancy, but LightTUBe could.

“Since we’ve been here, we haven’t had more than five minutes of downtime in almost three years,” Lufty said.

Holmes compares Tullahoma, where job growth outpaces the state average, to Fayetteville, North Carolina. Fayetteville, struggles to beat down unemployment. All the while existing fiber resources that could be used for local business and residents sits untapped due to a 2011 state law. When a Fayetteville Senator tried to exempt his community through legislative process, he was personally attacked in the Chambers. Fayetteville did not get its exemption.

For Steven Blanchard, chief executive of Fayetteville’s Public Works Commission, prohibiting Fayetteville residents from using the fiber network that’s already there doesn’t make sense.

“Why shouldn’t we be allowed to sell fiber if it runs by everyone’s house?” Blanchard said. “They are already paying for the fiber to be there, so why not allow them use it for telephone and Internet and capture back a lot of the cost they put in to have it there?”

The article offers some powerful graphics comparing services, state laws, and political influence dollars.

A must read! Don't miss it!

Rural Indiana Looks to Tax Increment Financing to Build Fiber Networks

Wabash County, Indiana wants to expand its access to high speed internet through a fiber optic network build out, and is planning to use a distinctive financial tool to do so. The Wabash County Redevelopment Commission has begun the process of assigning a special Economic Development Area designation for the purpose of helping to finance new fiber deployment through parts of the mostly rural county of 33,000 people.

Tax Increment Financing (TIF) is method of public financing that uses future gains in property or sales taxes within a defined area to subsidize a redevelopment or infrastructure project. A local jurisdiction can borrow money up front, build the project, and then use the increased tax receipts it generates to pay off the debt over a period of years. The concept is actually pretty simple: capture the value that something will have in the future to build it now.

TIF  has been a popular approach among local politicians around the country for decades as a way to work around tight budgets and finance improvements in blighted areas, often in the form of public infrastructure. It has sometimes drawn criticism, especially in cities like Chicago where it is very heavily used. One downside is that it effectively takes properties off the general tax rolls. 

More important for our purposes, however, is that the use of TIF for next generation fiber optic networks is a fairly new phenomenon. While municipal networks around the country have used a wide range of financing approaches to cover upfront costs, most have revolved in some way around bonds that are repaid from network revenue. Using TIF to capture the increased property value that a fiber optic network would create is an interesting approach.

In the case of Wabash County, it’s not yet clear exactly how the funds would be used. There is a local private incumbent provider, Metronet, which received $100,000 last year to match its own $1 million investment to bring fiber to a town on the north edge of the county. The county also has a cooperative utility (Wabash County REMC) that provides power and telephone services in rural areas and has expressed interest in using TIF to build out a fiber network. Whichever entity ultimately receives TIF money, it does not appear that the county is interested in owning the network itself. 

Wabash County is not alone it its pursuit of TIF-backed fiber networks. Other counties and municipalities in rural Indiana have been moving along the same lines, from Chesterton in the north to Dubois County in the south. The Indiana  Association of Cities and Towns, meanwhile, recently helped defeat an attempt by telecom industry lobbyists (ahem, AT&T) in Indianapolis to pass legislation eliminating the authority of local governments to use TIF - but only for fiber optics and other telecommunications equipment.  

Whether or not TIF eventually proves to be a good tool for building high speed fiber optic networks in rural areas and small towns remains to be seen. Taking a broader view of the value of a the public and private value a municipal network creates, beyond a simple glance at network revenues, is a step in the right direction. In any case, the right of local communities to make their own choices about how best to finance, plan for, and pursue their shared needs is paramount.

Whitewater Weighs Options for Municipal Broadband

Whitewater, Wisconsin, a city of just under 15,000 people that sits midway between Madison and Milwaukee, is considering its options for establishing a municipal broadband utility. As reported by the local Daily Union newspaper, members of the city council, the community development authority, other local bodies, and the public met this week to hear a feasibility presentation and discussion with Anita Gallucci, a Wisconsin attorney specializing in broadband utilities.

Whitewater already has some public fiber optic infrastructure, having gone live with their gigabit-capable Whitewater Unified School District network last fall. The network joins up with a larger fiber backbone on the nearby University of Wisconsin Whitewater campus, and has allowed Whitewater schools to increase their connection speeds by 1,200 percent while holding costs steady. The city is now looking at options for how to expand the opportunity brought by such high speed access to the broader community.

Tuesday’s meeting focused on two topics: the legal landscape for municipal broadband utilities in Wisconsin, and the varying levels of success that other Wisconsin cities have had with their own networks. On the legal front, Gallucci affirmed that “municipalities can get into the broadband business if they choose to do so,” but then went on to outline the hurdles created by Wisconsin law that make the process more challenging. From the Daily Union article:

Gallucci said that first, the city must prepare a formal report or feasibility study. The report must cover a three-year outlook which addresses revenues derived from constructing, owning, or operating the utility including such things as equipment, maintenance, and personnel requirements.

Given the upfront costs associated with building out a fiber optic network, a report focusing on a three-year outlook is unlikely to cast a favorable light on the project. Like any other significant investment in public infrastructure, municipal networks may take more than three years to break even. If we used that benchmark for roads, we wouldn't have many.

Wisconsin cities must also go through a public hearing and vetting process before voting on final authorization of a municipal utility. There is a shorter route on the books in Wisconsin, but one that effectively gives incumbents a veto:

Gallucci said that cities do not have to follow these steps in very specific circumstances, such as serving an area of the city that does not otherwise have service access; but cities must notify private companies (for example, AT&T, Verizon, or Charter Communications) of that project. However, if those companies say they currently, or plan to in the future, serve those areas, then the steps need to be followed.

It doesn’t take much imagination to guess what would happen if a city like Whitewater were to approach AT&T or Verizon and ask if they have any “plans to expand in the future” that might preempt the building out of a public network.

Wisconsin law is more obliging towards open access networks, according to Gallucci:

She said the steps could be avoided if the city acts as “a wholesaler of broadband services.” By this, she said, the intention would be to build the infrastructure and private companies would use those fibers to provide service.

“That would require the city itself to not provide any service to the end-user,” she explained.

While the legal environment in Wisconsin is generally unfavorable towards municipal broadband utilities, the meeting also highlighted some recent success stories. Reedsburg, which we wrote about here, was touted as the only Wisconsin city offering a “triple play” bundle through its broadband utility. Also mentioned was Sun Prairie, as fellow city seriously considering a FTTH network.

The next step will be for the Whitewater Community Development Agency to bring the issue before the City Council, which the city manager expected to happen “in the very near future.”  

Charlotte Media Eyes Salisbury's Fibrant

WSOC TV in Charlotte recently looked at Salisbury's four-year-old Fibrant network. Reporter Tenikka Smith investigated what a municipal network could do for Charlotte. Charlotte is also one of the communities working with Google in hopes of having it expand to them. That interest has led AT&T to consider updating its comparatively pathetic DSL services as well.

Smith spoke with a Salisbury small business owner who switched to Fibrant in 2010. Rick Anderson-McCombs of the Sidewalk Deli noted fast speeds and high quality voice service from Fibrant. According to Anderson-McCombs' mother, Angenetta Dover, the deli also saves $30 - $40 per month compared to past service with the local incumbent. Dover also uses the service at her home and notices a significant improvement:

"Even (the) lowest speed and slowest speed is super compared to what we used to have to do," she said.

Robert Van Goen from Rowan County's economic development coalition, Rowan Works, believes a municipal network could be a smart investment for Charlotte. The network tells potential job creators that a community is "prepared to do business for the next 10, 15, 20 years and compete in the global marketplace."

WSOC TV compared prices; they found Time Warner Cable and AT&T offered basic triple-play bundles - up to 6 Mbps download - for $79 per month. Upload speeds, the real test for businesses, are typically much slower. Fibrant's lowest tier triple-play bundle offered 20 Mbps symmetrical service for $97 per month.

Saving money for better service is always a winning strategy. Local businesses often consider other benefits from municipal networks; Anderson-McCombs told Smith his motivation reached beyond financials:

“The main reason I got Fibrant was not so much to help my business, but help my town because I think it's very progressive of Salisbury to include Wi-Fi and Internet service in our utilities."

Below is an ad Fibrant created with local businesses describing the superior service of Fibrant phone. Though residents may be less enthusiastic about phone service, it is the lifeblood of many local businesses.

Video: 

Home Security Firm ADT Opposes Kentucky Bill to Eliminate Landlines

In February, we reported on another attempt by AT&T, Windstream, and Cincinnati Bell, to eliminate plain old telephone service (POTS) in Kentucky. According to Mimi Pickering from the Rural Broadband Policy Group, AT&T's SB 99 is quickly moving ahead and may even be up for a full House vote at any time.

Kentucky has fought to save its landlines for three years in a row. Many of us only think of landlines as a way to speak with loved ones, but for the isolated, elderly, and those that face daily health hazards, a landline is also a lifeline.

We recently learned that home security firm ADT submitted a letter opposing the passage of SB 99 because many business and residential customers rely ADT's technology designed for traditional landlines. Even thought the letter is dated March 4th, it only recently came to light. The letter states:

Many of our customers, like the one who alerted ADT to this bill, rely on POTS to carry alarm signals to and from monitoring companies like ADT.  Some also use POTS for their Personal Emergency Response Systems (PERS) and medical alert services.  ADT accepts that the transition from POTS is a natural progression towards new technology, and is actively working to develop best processes and an acceptable timeline where POTS is discontinued; however, the safety of everyday Kentuckians could be jeopardized if this is not done in a pragmatic, thoughtful way.

Kentuckians can weigh in on this bill by calling the toll free message line at 800-372-7181 and tell House leadership and their legislator to oppose SB 99.