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Kentucky Coalition Takes Down AT&T Bill to Remove Consumer Phone Protections - Community Broadband Bits #44

Episode #44 of our Community Broadband Bits podcast expands on our story exploring a major victory over bad AT&T-driven legislation in Kentucky. We welcome Mimi Pickering of Appalshop and Tom FitzGerald of the Kentucky Resources Council.

We discuss why the AT&T-authored bill to gut consumer protections was bad for Kentucky and how a terrific coalition of public interest groups, unions, and others were able to protect the public interest. This was the second time they have defeated a similar bill, offering important lessons to those of us in different states that have not yet abandoned basic consumer protections for the telephone just because AT&T told our legislature they were unnecessary.

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

This show is 36 minutes long and can be played below on this page or subscribe via iTunes or via the tool of your choice using this feed. Search for us in iTunes and leave a positive comment!

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

Thanks to Mount Carmel for the music, licensed using Creative Commons.

In Kansas, Ottawa Launches Own Fiber Optic Network

Ottawa, located in east central Kansas, recently launched its own municipal fiber network. The community of 13,000 in Franklin County watched nearby Chanute build and establish its own broadband utility. Ottawa plans a similar incremental strategy. Both communities boast strong farming traditions and host industrial employers that could not get what they needed from the existing providers.

I spoke with Chuck Bigham, IT Director for the City of Ottawa, who gave me some nuts and bolts on the network. I also touched base with City Manager Richard U. Nienstedt, both are heavily involved in the establishment of the network.

Like in Chanute, local leaders have long nourished a vision for better connectivity. In recent years, they realized the vision was not only attainable, but necessary for the community to thrive.

Approximately seventeen miles of fiber, installed by USD 290 and Franklin County in the 1990s, was already in the ground when the project began. Students and staff connected to the Internet and linked the 8-10 school district facilities via its fiber network. These pre-existing resources became the backbone of Ottawa's new utility. Cooperation between the City Municipal Utility, USD 290, and Franklin County facilitated the configuration of the new network. Ottawa now provides business Internet access, expanded educational opportunities, and a higher level of service than was previously available.

Two years ago, the City and its Chamber of Commerce reached out to major businesses to determine the need for broadband. They found businesses in Ottawa were connected through existing providers, but were unhappy with price and level of service. The community's industrial park seemed especially disadvantaged. Businesses needed better upload speeds than the existing T1s, which ran up to $600 per month. While DS3 connections were available, they were unaffordable and there was no level of service between the two options. Businesses could not convince AT&T to offer something they could afford and, as Bigham noted, the telecom giant appeared to be "milking the cow."

Map of Ottawa, Kansas

This is a common complaint among communities - the big national telephone and cable companies often refuse to upgrade their level of service because the lack of alternatives for local business connectivity means the firms cannot switch away from the existing provider.

The City approach USD 290 and Franklin County and proposed a partnership. The City would use several available fibers on the existing infrastructure to serve as the community network backbone. The School District and the County would still own the fiber asset already in place, while the City would own any added segments and the routers and switches to make it work. The City and its utility would support and manage the network 24/7. The school board and county commission approved the proposal in the fall of 2012.

The School District now pays the City $3,000 per month with monitoring and network support from the City all day, every day. USD 290 gets double the bandwidth it used to get from AT&T, when it paid nearly $6,000 per month for a DS3 connection. Paying less, but getting double, seems like a very smart investment.

Ottawa followed Chanute's example by providing a floor instead of a ceiling as the foundation for service. In other words, customers contract for minimum capacity but are allowed to burst to whatever capacity is available at any given time. For example, the School District will soon connect with a minimum 250 Mbps with the ability to burst to 500 Mbps.

Over the course of ten years, Ottawa has spent less than $500,000 on its next-generation community owned network. All the revenue from the network goes back into maintenance and upgrades. City government facilities and two electric substations, which used to connect only to each other, now link to the main power plant via fiber.

Neosho Community College's Ottawa Campus connects to the network. Ottawa Cooperative Association recently joined the network to take advantage of the fast upload speeds needed to send data rich reports and get timely information on grain prices. The Coop previously had a slower DSL connection. Bigham and Nienstedt both expect to see more business customers when the network expands to the Northeast Ottawa Industrial Park, the next expansion project.

Nienstadt tells us via email:

Our main emphasis has been to use it [the network utility]  as a recruiting and retention tool and be able to say that, "We have your broadband needs solved and you do not have to worry about that issue when locating in Ottawa, Kansas."  Most assuredly, some of the businesses have been able to benefit from lower broadband costs since we  started surveying and talking about a fiber optic utility.  That, quite frankly, was one of our goals.

"Level Playing Field" Padded With Public Dollars to Private Providers

Municipal broadband networks have been gaining traction across the country. It's easy to see why: In many rural and low-income communities, privately offered broadband services are nonexistent. In its 2012 Broadband Progress Report the Federal Communications Commission counted nearly 20 million Americans (the vast majority living in rural areas) beyond the reach of broadband.

The Free Press' Timothy Karr's words are supported by the growing number of pins on our Community Network Map. We connect with places nearly every day where municipal networks fill the cavernous gaps left by the massive corporations. Large cable and telecom providers do not hide their aversion to servicing rural areas, yet year after year their lobbying dollars persuade state politicians to introduce bills to stop the development of municipal networks. Karr reviewed recent efforts to use state laws to stifle community owned networks in a Huffington Post article.

As readers will recall, this year's front lines were in Atlanta, where HB 282 failed. We hope that loss may indicate a turning point in advancing municipal network barriers because the bill lost on a 94-70 vote with bipartisan opposition. If it had succeeded, Georgia would have been number 20 on a list of states that, thanks to ALEC and big corporate sponsors like AT&T, Comcast, Verizon, and Time Warner Cable, have decided to leave their citizenry begging for the private market to come their way.

Time and again, the supporting argument goes like this:

"A vote 'yes' for this bill means that you support free markets and free enterprise," [Rep Hamilton, the Chief Author of HB 282] said [on the House Floor].

A 'no' vote means that you want more federal dollars to prop up cities, Hamilton said.

But Karr points out that some policy makers are starting to question that argument, with good reason. From his article:

"They talk about [the companies] as if they are totally free market and free enterprise, but doesn't AT&T get some tax breaks?" [Rep. Debbie Buckner] asked. "Didn't Windstream get some stimulus money? Isn't that government money?"

Indeed, phone and cable companies have been on federal welfare since their inception. A 2011 Institute on Taxation and Economic Policy study shows AT&T and Verizon receiving more than $26 billion in tax subsidies from 2008 through 2010. The FCC's 2012 report on Universal Service Fund subsidies shows nearly $3 billion in federal payments to AT&T, Verizon and Windstream.

In 2010, Windstream, Corp. -- a telecommunications company with services across the South -- applied for $238 million in federal stimulus grants to improve its service in 16 states. More than 16 million taxpayer dollars went to upgrade the company's services in Georgia.

So, while AT&T, Verizon, and Windstream continue to work with legislators and lobbyists who advance bills that maintain an environment rife with corporate welfare, rural Americans get nothing for their contributions. As the word spreads and more people learn about the benefits of community networks, we anticipate more people will recognize their value. In addition to saving public dollars, increasing connectivity, and spurring economic development, local networks are accountable to the communities they serve, unlike the big corporate ISPs, who are accountable to shareholders.

"The private companies have not been there for us," said Rep. Buckner, who represents rural parts of Talbot and Meriwether Counties. "And if they say they're going to come and be there for us, we don't know how long it will take them to find us."

Kentuckians Once Again Fighting to Keep Landlines

Last year, we reported on the failed SB 135, which would have eliminated the "carrier of last resort" requirement in the state. The bill, sponsored by Republican Senator Paul Hornback would have let AT&T decide who could receive basic telephone service and would have limited consumer protections.

Last year's bill did not become law, but a progeny, SB 88, has already passed in the Kentucky Senate and was received in the House on February 15th. (We'd like to report what committee will hear it first but the Kentucky Legislative web has not yet published that information.) Senator Hornback is again the chief author of the bill, crafted by AT&T and its ALEC pals.

The Kentucky Resources Council (KRC) provides an analysis of SB 88 and a prognosis on how it would affect Kentuckians. KRC must be feeling deja vu, as are many organizations looking out for rural dwellers who depend on their landlines. These bills continue to be introduced year after year as large telecommunications companies spend millions of lobbying dollars, also year after year.

WMMT, Mountain Community Radio in Whitesburg, Kentucky, recently reported on the legislation. Sylvia Ryerson spoke with Tom Fitzgerald from KRC, who discussed the analysis. From KRC's report on the legislation:

At potential risk is the opportunity for existing and new customers, to obtain stand-along basic telephone services from the incumbent telephone utility, or “Plain Old Telephone Service (POTS)” as it is called. Those most adversely affected by this loss of access to basic, stand-alone, telephone service are those least able to obtain affordable and reliable alternatives – those who live in rural, lower density areas, and the poor in dense, urbanized areas who have no affordable alternative priced as low as POTS.

Kentucky Resources Council

The main concerns with the bill include:

Removal of power from the Public Service Commission to hear and resolve complaints about local exchange service. This would affect voice service, operator assistance, directory assistance, and accurate 911 assistance. Restoring lost service is often a waiting game for rural customers served by AT&T. With no where to go, customers can lose their connection to family and the outside world for even longer periods. As with many other provisions of this bill, the elderly are the biggest casualty. Healthcare matters are  often handled over the phone, including my dad's pacemaker monitoring.

In areas where there are more than 5,000 households, offering basic stand-alone service would be at the provider's discretion. Service could be terminated without prior regulatory approval if there are any other voice services offered to the customer, even if that service was from an affiliate. This lack of competition would likely lead to cost increases for people who cannot afford them. Another scenario would be the company's requirement for customers to bundle services, forcing those least able to afford it to purchase services they do not need or want just to get telephone service.

In communities where there are fewer than 5,000 households, the current providers (AT&T, Windstream, or Cincinnati Bell) could cease to offer stand alone landline service of there was available voice wireless service, even if that service was less effective for 911 purposes. Again, the "forced bundle" would be an issue.

They could also petition to be relieved of the obligation to provide basic telephone service if they meet certain criteria regarding the availability of voice services from other providers in the area. For example, if there is a broadband provider "capable" of providing voice services (contrasted with one that actually "does provide" voice services) the provider could be relieved of the obligation. Again, that "capable" provider does not have to offer the service as a stand alone, but may require bundling.

Providers can use any technology they wish if they decide to continue the "provider of last resort" obligation, which will make that obligation completely deregulated. This tactic is the backbone of the private sector's efforts to deregulate. For more on this strategy, we encourage you to listen to our conversation with Harold Feld on the 23rd episode of the Broadband Bits Podcast.

Telephone

For more detail on the bill, and all its shortcomings, take a few moments to review the detailed analysis by KRC. The full text of the bill, its amendments, and the status, are available on the Kentucky General Assembly website.

So what could be gained for Kentuckians by passage of such a bill?

From a Courier-Journal report by Joseph Gerth:

Proponents of Senate Bill 88 say the bill would allow companies like AT&T, Cincinnati Bell and Windstream to sink more money into expanding wireless broadband communications rather than costly old, outmoded land lines.

History shows us, however, that promises made by regulated companies today often end up as foggy memories tomorrow. We have seen time and time again how dergulation given in exchange for promises results in a breach of the social contract. This is known as Kushnick's Law:

"A regulated company will always renege on promises to provide public benefits tomorrow in exchange for regulatory and financial benefits today."

Rather than wait to be taken advantage of again, we encourge you to call the toll-free legislative message line 1-800-372-7181 and leave a message that will be delivered to all legislators. This is especially critical if you live in Kentucky, but legislation like this will march across all states if it passes here or elsewhere. 

Hey FCC: Time to Expand Unlicensed Spectrum!

Remember that Washington Post story about bigger, free Wi-Fi networks? It went hugely viral with all manner of outlets picking the story up, unintentionally distorting it, and amplifying it.

Some good has come of it. For one thing, I was reminded that Ars Technica does a really good job of tech reporting, better than anyone else in my estimation. Cecilia Kang offered a follow-up story to clarify the original that should help more people to understand what is at stake.

But more importantly, we saw a lot of media coverage about something really important, whether we allocate future spectrum for everyone to use (much like Wi-Fi) or will we reserve it just for AT&T, Verizon, or another big corporation?

Harold Feld has a strong opinion on the matter:

This past week, we’ve had quite the discussion around Cecilia Kang’s WashPo piece describing a plan by the FCC to create a national WiFi network by making the right decisions about how to allocate spectrum between licenses for auction and what to leave available for the unlicensed TV white spaces (“TVWS” aka “Super WiFi” aka “Wifi on steroids”). As Kang describes, the FCC’s opening of sufficient spectrum for TVWS could lead to “super WiFi networks (emphasis added) around the nation so powerful and broad in reach that consumers could use them to make calls or surf the Internet without paying a cellphone bill every month.”

Needless to say, the article faced much pushback, despite a subsequent Washpo clarification to indicate the FCC was not, actually, planing to build a network. Amidst the various critics, there were some general defenders of the concept. My colleagues at EFF noted that increasing the availability of open spectrum for WiFi-type uses , and my friends at Free Press argued that such a free public wifi network (or, more accurately, series of networks) is in fact possible if the FCC makes enough good quality spectrum, suitable for broadband and usable out doors, available on an unlicensed basis.

I will now go a step further than any of my colleagues. I will boldly state that, if the FCC produces a solid 20 MHz of contiguous empty space for TV White spaces in the Incentive Auction proceeding, or even two 10 MHz guard channels that could nationally produce two decent sized LTE-for unlicensed channels, then we will have exactly the kind of free publicly available wifi Kang describes in her article. Or, “Yes Cecilia, there really is free national public wifi. Don’t let the haters and know-it-alls tell you otherwise.” ...

MAG-Net Logo

I wrote a much shorter, far less impressive piece for the Media Action Grassroots Network that embraces a similar argument:

You know how you can buy a simple little device for as little as $30 now to set up your own Wi-Fi network that creates an easy in-home network? Imagine if your neighborhood could do that too!

Wi-Fi works in your home because the federal government, which manages how the public airwaves are divided for various uses, decreed that a small slice of spectrum would be unlicensed - sitting there for anyone to use however they wanted. But that spectrum is not suited for a neighborhood-wide network. ...

And we have seen others take notice as well, including the Baltimore Sun Editorial Staff:

The companies who oppose the FCC's plan argue that the agency's mission to serve the public interest would best be achieved through the revenues from an auction of the airwaves. The last such auction, in 2008, generated nearly $20 billion for the government. That's a substantial amount of money, to be sure, but the relatively small portion of the spectrum that the commission now proposes to leave open to unlicensed use would be worth only a fraction of that — a pittance compared to the economic activity that could be generated through the creation of new products and services to take advantage of the unlicensed spectrum.

FCC Logo

Therein lies the danger. The big wireless lobbyists are pushing Congress and the FCC hard to ensure that they get the licenses. Republicans in particular are arguing that we need the billions (perhaps 3-5?) of dollars that an auction would fetch for the treasury. This would be a terrible tradeoff.

I doubt that anyone has a handle on the value of Wi-Fi, but it is orders of magnitude higher than a onetime infusion of a few billion dollars. How much would you pay any given day to use Wi-Fi? Multiply that by over 200 million people. And this new spectrum could allow bigger networks than Wi-Fi supports -- an even greater potential value!

Verizon and AT&T know this, of course. They will gladly spend billions to ensure that we are stuck paying far more for services from them than we can build for ourselves if only we are allowed to use our spectrum to do so.

Write your elected representatives to support increased unlicensed spectrum.

The Five Fundamentals for Future Telecommunications - Community Broadband Bits Podcast #32

Harold Feld, Senior Vice President of Public Knowledge, is back on Community Broadband Bits to discuss five fundamental rules necessary to ensure we have a great telecommunications system that benefits everyone. Harold first appeared on our show in episode 23.

Harold explains the Five Fundamentals here and includes a link to their full filing [pdf].

In short, the fundamentals are: Service to all Americans, Interconnection and Competition; Consumer Protection; Network Reliability; and Public Safety. The comments also include some thoughtful words about the balance between federal, state, and local governments in ensuring these five fundamentals.

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

This show is 25 minutes long and can be played below on this page or subscribe via iTunes or via the tool of your choice using this feed. Search for us in iTunes and leave a positive comment!

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

Thanks to mojo monkeys for the music, licensed using Creative Commons.

Franklin Municipal FiberNET Spurs Economic Development, Serves Government, in Kentucky

Franklin, Kentucky expects to see more positive economic growth when it launches its new fiber optic network. According to an article in the Bowling Green Daily News, the south central community is ready for the upgrade:

“We are super excited about it,” said James McCaslin, associate vice president of academic affairs and director of Franklin-Simpson Center. “It will be like going from 1970 to 2013 with the flip of a switch.”

We contacted Tammie Carey, Fiber Services Manager for Franklin Municipal FiberNET, and she was good enough to answer some questions. She told us that 32 miles of aerial fiber are strung in three loops around the city to ensure redundancy. She expects the network to launch near the end of January for local businesses, though the utility has already been serving one business as detailed below.

The decision was based solely on a desire to boost economic development, a sentiment echoed in the Daily News article:

It’s hard to recruit industry now if you don’t have (fiber optics),” said Dennis Griffin, industrial recruiter for Simpson County. “A lot of industries, particularly in this area, are satellite plants connected to their corporate offices, somewhere else in the United States. They all need to be connected by fiber.

“So if you don’t have that, it’s hard to compete with communities that do,” Griffin said. “Ten years ago, you could get by with T-1 lines – now most industries are just expecting that you have fiber."

Apparently, City officials contacted AT&T and Comcast several years ago and asked them to install fiber to the Franklin industrial parks. When they refused, City Leaders began pondering the possibility of a municipal fiber network. Tammie tells us about the decision in an email:

It was economic based.  Our Industrial Authority was working with several industries regarding possibly locating in our community.  A need they had was large amounts of reliable bandwidth.  The existing companies would not build fiber to the industrial park locations.  The city saw this as a major hindrance with our economic development recruitment and made the decision to invest in a system.

Tractor Supply Company Logo

The decision is paying off even before the formal launch. Tractor Supply Company built a distribution center in Franklin in 2011. Tammie tells us that the retail farm and ranch supplier required a high capacity connection for basic business. Franklin Municipal FiberNET was able to meet the company's needs and is already servicing the facility. Tractor Supply Company brought 336 new jobs to the community. City leaders anticipate reproducing this success story as they offer services to more local businesses.

The City plans to connect all its facilities and departments. The local vocational college will also lease dark fiber from the city. Windstream is providing Internet access via Franklin Municipal FiberNET:

Previously we used internet service supplied by Comcast Cable.  Comcast has a franchise agreement with the city.  As part of the franchise agreement, all the government offices use their internet service for free.  So this is actually an added expense for the city.  However, we feel the reliability and consistency in speed will help employees work more efficiently.

The network is funded with a $1 million grant from the U.S. Department of Commerce Economic Development Administration that was awarded in 2005. The remaining $1.4 million is funded through municipal bonds.

There are currently no plans to bring fiber to any of the 8,400 residents but city leaders continue to mull over possible Wi-fi in parts of town. For now, Franklin is taking it slow. From the article:

“But no plans have been made,” Carey said. “We want to know how to crawl before we run the marathon. So we want to do one piece and make sure we are doing it well.”

Op-Ed: NC In Bottom of Broadband Barrel

Common Cause's Todd O'Boyle and myself have just published an opinion piece in the North Carolina News & Observer to highlight the foolishness of the General Assembly revoking local authority to build broadband networks.

Todd and I teamed up for a case study of North Carolina's most impressive fiber network, Greenlight, owned by the city of Wilson and then turned our attention to how Time Warner Cable turned around to lobby the state to take that right away from communities. That report, The Empire Lobbies Back, was released earlier this month.

An excerpt from our Op-Ed:

The Tar Heel economy is continuing its transition from tobacco and textiles to high technology. Internet startups populate the Research Triangle, and Charlotte’s financial services economy depends on high-quality data connections. Truly, next-generation Internet connections are crucial to the state.

It is deeply disturbing that the Federal Communications Commission ranks North Carolina at the bottom nationally – tied with Mississippi – in the percentage of households subscribing to a “basic broadband” connection. The residents and businesses of nearly every other state have superior connections.

Read the whole thing here.

Susan Crawford on Bloomberg TV

Six minute interview from Susan talking about the failure of policy in America to expand access to fast, affordable, and reliable networks.

Community Broadband Bits 28 - Bruce Kushnick

If you think the United States cannot afford to take a fiber optic cable to just about every home in the country, you might be surprised to find out that we have already paid for it. We just haven't received it. Our first podcast guest in 2013, Bruce Kushnick of the New Networks Institute, explains the $300 billion ripoff.

Bruce and I discuss how the big telephone companies promised to build a fiber optic Internet in return for being allowed to increase their prices. This brings us to Kushnick's Law: "A regulated company will always renege on promises to provide public benefits tomorrow in exchange for regulatory and financial benefits today."

The telephone companies raised their prices, but decided to give the proceeds out to shareholders rather than invest in the promised networks. We got higher prices and DSL rather than the fiber optic networks we were promised. Our regulators largely failed us, in part because the only people who pay attention to Public Utility Commissions are the industries regulated by them and the occasional underfunded consumer advocate.

This is a very good introduction to why we all pay far too much for services that are too slow and insufficiently reliable.

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

This show is 26 minutes long and can be played below on this page or subscribe via iTunes or via the tool of your choice using this feed. Search for us in iTunes and leave a positive comment!

Listen to previous episodes here.

Thanks to mojo monkeys for the music, licensed using Creative Commons.