Craig Settles sits down, across the country, to interview Maryland's Lori Sherwood, the Program Director for One Maryland. One Maryland is a stimulus-funded project bringing fiber-optic broadband to every county in the state. We have written about several counties using these connections to start building muni fiber networks (see our stories tagged with Maryland). One of the partners is the Maryland Broadband Cooperative, which focuses on middle mile connections also.

Listen to the interview:

This project is expected to start saving the state some $30 million a year while greeting increasing the capacity to essential community institutions. Many of these institutions will undoubtedly be moving away from incumbent T1 and similar connections that have been gouging the taxpayers for years by grossly overcharging for what they provide. However, we do have the same concerns about this project as we recently noted in North Carolina's MCNC project, namely that statewide networks connecting libraries and schools take potential anchor tenants off networks that could be built by communities to serve everyone. Without these anchor tenants, it will be more difficult to finance a network available universally.

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

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

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

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

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

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

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

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

Some of the language:

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

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

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

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

But the language goes further...

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

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

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

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

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

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

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

It's 2011 and time for Qwest to renew a push to gut local authority in a number of states - Idaho and Colorado to start. An article for the Denver Post explains the argument:

Phone companies say state-level oversight of video franchising fosters competition because it is less cumbersome for new entrants to secure the right to offer services.

Many states have also eliminated the condition that new video competitors must eventually offer service to every home in a given municipality, a requirement placed on incumbent cable-TV providers.

Gutting local authority is the best way to increase the disparities between those who have broadband and those who do not. Qwest and others are only interested in building out in the most profitable areas -- which then leaves those unserved even more difficult to serve because the costs of serving them cannot be balanced with those who can be served at a lower cost.

The only reason that just about every American living in a city has access to broadband is because franchise requirements forced companies to build out everyone. Without these requirements, cable buildouts would almost certainly have mirrored the early private company efforts to wire towns for electricity -- wealthier areas of town had a number of choices and low-income areas of town had none.

In Idaho, those fighting back against this attempt to limit local authority are worried that statewide franchising will kill their local public access channels - a reality that others face across the nation where these laws have passed.

The channels, which are also used to publicize community events, provide complete coverage of Pocatello City Council, Planning and Zoning and School District 25 board meetings, as well as candidate forums before elections.

Without these local channels, how could people stay informed about what is happening in the community? Local newspapers are increasingly hard to find. In many communities, these channels are the last bastion of local news. 

This fight over statewide franchising goes back a number of years, but the general theme is that massive incumbent phone companies promise that communities would have much more competition among triple-play networks if only the public ceases to derive benefits from its Right-of-Way.  Statewide franchising laws limit local authority to negotiate for access to this valuable asset that is managed by the local government. The laws strip communities of the power to negotiate with video providers, creating a single franchise process in the state government (which typically has very little or no oversight). Communities lose public access channels, fees for creating local content, and often oversight to require certain levels of customer service.

The states that have gutted local authority in this way have seen very few benefits -- the increase in competition is negligible - because the real barrier to competition has nothing to do with local or statewide franchising. The only barrier worth addressing is the massive advantages incumbents have -- a result of the high cost of building these networks. When a competitor builds a network, it is often competing with an incumbent that has amortized the costs of its network and will be able to cut its prices while cross-subsidizing its operations from non-competitive markets. A number of incumbent providers have engaged in predatory pricing, taking a loss on their customers in an effort to prevent the network from generating the necessary revenues to operate and make its debt payments.

The price of gutting local authority to benefit Qwest, a company with no capacity for the upgrades necessary to match the speeds and prices of DOCSIS3 cable networks, is far too great.

The Design Nine blog alerted me to a bill in New Hampshire that would modify state law to allow communities to build publicly owned networks. It appears they may currently invest in a network in unserved areas -- though few places are entirely unserved. Most places have pitifully slow and overpriced DSL available to at least some residents. This bill would expand their authority to build networks.

Unfortunately, I have no sense of how likely this is to pass. The story in the Concord Monitor suggests it is seeing intense opposition from the usual sources - the private companies that want to decide alone who gets access to the Internet at what speed and at what price.

Unfortunately, the proponents of the change appear poised to limit themselves to a purely open access model - a limitation that could greatly hurt them as they build a network. Communities must be free to choose a business model that works, not have it imposed by a "compromise" at the legislature.

Requiring open access actually compromises the vitality of the network. Open access is an incredibly powerful idea - introducing real competition where people have long had no choices. But no community has yet made it work financially from the start. The early years are brutal for a network where the owner cannot provide services -- there are difficulties in aligning the incentives for those involved and generally insufficient revenue to make debt payments in the early years.

Communities must fight for the right to offer services, even if they would prefer not to. Offering services generates more revenue when it is most needed - the early years. Allowing Comcast and FairPoint to define the business models of communities is poor policy. The New Hampshire legislation - HB 1242 - is available here.

We wish communities like nDanville and the Wired Road luck as they expand to citywide networks on an entirely open access basis. However, existing experience suggests that communities should focus first on getting the numbers to work and then opening the network to greater competition down the road.