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Kansas Anti-Competition Bill Authored by Cable Lobbyists

We learned a lot today about the anti-competition bill (SB 304) in Kansas to limit Internet network investments. Ars Technica's Jon Brodkin discovered the source of the bill, the Kansas Cable Telecommunications Association:

That's a lobby group with members such as Comcast, Cox, Eagle Communications, and Time Warner Cable. The bill was introduced this week, referred to the Committee on Commerce, and scheduled for discussion for Tuesday of next week.

That hearing will now be delayed as the cable lobbyists strategize on a bill that less transparently serves only their interests. As usual, we see the cable lobbyists claiming that municipal networks use taxpayer dollars, despite the reality that most do not.

Much of what I see in Kansas points to Time Warner Cable being behind this - a lame attempt to stop Google Fiber using lobbying power rather than innovating and investing. However, the bill has tremendously negative implications for rural Kansas because local governments are often the only entities that care if their communities have the Internet access they need in the modern economy.

It stretches credulity to think Kansas would pass a bill that would prevent Google from expanding its network in the region. But we have seen a number of states (ahem, North Carolina) pass cable-authored bills that prevent communities from building fiber optic networks if they have anything faster than dial-up available in even part of town.

The cable lobby would consider it a win if they can still push a bill through that would kill municipal networks while allowing approaches like Google Fiber and Wicked (in Lawrence) to expand.

Fortunately, Google has a history of opposing restraints on local authority to build networks and it is part of a business coalition opposing this bill. As with most Americans, that coalition believes any decision on whether a network is a wise investment should be made locally, not in Topeka or in DC.

Craig Settles' had a Chanute official on the Gigabit Nation audio show to discuss the bill and impact on rural Kansas:


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Others writing about this bill and negative impact on Kansas included Karl Bode at Broadband Reports, the Consumerist, Newspoodle, and Daily Kos.

And finally, Chanute created a video about this bill:

Video: 
See video

Potential Funding Availability via Race to the Top

Let me start by saying that I don't yet know anything in addition to what I write below. We are all waiting for more details. On January 30, the FCC will take action on the FTTH Council's Gigabit Race to the Top progam. We previously took a brief look at the idea, while focusing on big cable and telephone companies' responses.

FTTH Council expects the FCC to adopt a test program that will start with a call for those interested to submit "expressions of interest." The reason we are noting this now, when we know so little about the program is that they believe the program will move quickly once it is announced, so those who may be interested should start planning for it.

From what we know, this program will be open to community owned networks and will be largely focuses on smaller markets with preference for networks that will be improving connections to anchor institutions in particular.

Below, I have embedded a discussion between Craig Settles and Alyssa Clemsen-Roberts, the Industry Affairs Manager at the Utilities Telecom Council.


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Iowa Municipal Utilities on Gigabit Nation

We were glad to hear our friend, Curtis Dean of the Iowa Association of Municipal Utilities join Craig Settles on his Gigabit Nation Internet Radio show. Listen below to learn more about what local utilities are doing to help their communities thrive in the digital age.


Georgia Mayor: "I Hate to Think What Our Community Would Be Like Without Our Network"

Recently on Gigabit Nation, host Craig Settles visited with Mayor Max Beverly from Thomasville, Georgia. As our readers know, the Georgia General Assembly is again considering a bill to limit municipal efforts to bring connectivity to local residents and businesses. That bill is currently scheduled to be heard on Tuesday afternoon, 2/26, but many people have already expressed their anger at it in Facebook comments on the bill page.

HB 282 sets a very low bar for what is considered "served" - 1.5 Mbps - and prohibits municipal networks from serving those areas while also imposing a new heavy cost on investing in unserved areas. 

Mayor Beverly discusses how he and other Georgia community leaders are fighting HB 282 through education. Speaking from first-hand experience, he finds that elected officials often turn from support to opposition when they hear about the incredible success of Thomasville. 

Mayor Beverly finds himself sharing the story of Thomasville's victories that are all tied with the network, created in 1999. In Thomasville:

  • direct profits from the telecommunications utility have eliminated city taxes - police, fire, and other city services are funded through the $2 million+ contributed to the general fund
  • over 500,000 people in south Georgia have received state-of-the-art healthcare services which could not have been delivered without the incredible capacity of the network over a multi-county area
  • over 6,000 jobs (including many in the hospital and its clinics) have come to Thomasville through employers that would not have been able to locate there prior to the services offered through the network
  • about 70 schools over a 10 county region receive network services that Mayor Beverly describes as a "game changer" in educational opportunity

Settles and Mayor Beverly also spent time on what makes Thomasville such a success. The Mayor attributes the community's entrepreneurial approach and their unsurpassed customer relationships. The network and its staff are local and accountable to the people it serves so there is no place for anything other than superb customer service.

The business and residents depend on the Thomasville network. Mayor Beverly, like all the other officals we talk to, can't imagine life in their town without the network. While fighting legislation like HB 282, Mayor Beverly has encountered other elected officials from places where community owned networks are being planned or considered. He says that those leaders all have the same message for the legislature: "Our areas are behind now and if you pass this bill we will always be behind."

Listen to the entire interview on Gigabit Nation to learn about Thomasville's incredible network.

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Discussing the FCC's Gigabit Challenge

Last week, I joined Craig Settles on his Gigabit Nation show to discuss Chairman Genachowski's Gigabit Challenge along with Jim Baller, Masha Zager of Broadband Communities Magazine, Gary Evans of Hiawatha Broadband Communications, and Arkansas Senator Linda Chesterfield.

I take a more moderated stance in this discussion than I have previously, in part because we do need to take advantage of this opportunity and because we cannot expect the FCC to suddenly act in our interests when a Congress dominated by big corporations can so quickly punish them for such actions. I think the discussion is worth a listen, though it is 90 minutes.

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Christopher Mitchell on Gigabit Nation Today

I am going to be on Gigabit Nation today with Craig Settles, a live call-in show, from 2-3 Eastern time. You can listen online here both during the show and after, when the recording will be made available.

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Craig put together this summary:

Local governments' use of broadband to improve communication and operations is one of the two main pillars in the financial sustainability model of community broadband networks, wrote host Craig Settles in his first book on the subject. Stakeholders need to pay more attention to this pillar.

The Institute for Local Self Reliance (ILSR) recently released a Public Savings Fact Sheet that spells out in dollars and sense how specific local governments in Florida, Ohio, Virginia and several other states used broadband to significantly cut costs. Christopher Mitchell, a Director with ILSR, joins us to discuss some of these projects.

Mitchell provides assessments of how these various communities identified operational areas broadband could impact. He also offers pointers for listeners who want to replicate some of these successes.

Canadian Community Brings Fiber to All in Alberta Town

Back in 2010, we reported on SuperNet in Alberta, Canada. We noted how, even though it resulted in significant middle-mile infrastructure expansion, there were still many, many Canadians along the route that were not connected. We drew a parallel between that experience and the focus on middle mile infrastructure via the broadband stimulus programs.

In October, Broadband Communities Magazine carried Craig Settles' article on Olds, a small community in Alberta that overcame the last-mile challenge by working for over 10 years to create that last-mile connection, culminating in O-Net. This town is an inspiration for other communities who decide to take matters into their own hands and find a way to get members connected and engaged. 

Settles tells how the process began as a collaborative effort to get organized and revitalize the economy. A technology committee was charged with bringing fiber throughout the county, but the expense was prohibitive. From the article:

"The initial estimate to lay fiber optic cable throughout the county was approximately $80 million [Canadian dollars], well beyond OICRD's [Olds Institute for Community and Regional Development] funding ceiling,” states Joe Gustafson, who was OICRD chairman at that time. “The Tech Committee subsequently refocused on just the town of Olds and its population of just over 8,000, which brought the estimate down to $13.5 million, or about $3,140 per premises passed.”

The story goes on, taking us through several stops and starts the community experienced when working with private providers:

“To date, few incumbents see value in working with a community on a network such as this,” states Craig Dobson, currently the director of Olds Fibre Ltd. (OFL) and initially a consultant for the institute. “In essence, they believe strongly in facilities-based competition and appear to be threatened by market- based services competition that open- access networks enable.” Open-access networks rely on service providers for revenue – without them, the networks are not sustainable.

After working with the private providers to no avail, the organization decided to build the network themselves. The community next tried to work with a partner that would manage the network while the town retained ownership but even that partnership fizzled. OICRD remained the nonprofit organization that owns the town's for-profit network manager, Olds Fiber Ltd (OLF).

Olds Fiber Network Logo

The results have been favorable:

Owning its network enables a town to make business decisions that are in the best interests of its community. By having a well-managed, community-owned enterprise, a town such as Olds could retain the millions of dollars that other- wise were leaving the community every year for voice, Internet and TV services.

...

OICRD, a nonprofit organization, owns the for-profit OFL and provided it with a shareholder loan to build the dark fiber network – which the institute also owns. OFL licenses the network from the institute and is responsible for operating it. OFL sells broadband services and pays the institute a per-subscriber fee based on a formula that enables OFL to generate enough money to cover operating expenses. The institute uses the revenue from these fees to fund community economic development projects.

Local leaders find that the province is giving communities room and opportunity to be self-reliant in achieving connectivity. Olds received a government loan that covered some of the initial costs and OFL President/CEO Lance Douglas told Settles:

“The province is shifting toward a policy of letting communities take responsibility for their own economic and social development. Our community said, ‘We’ll take the risk.’ And government basically said, ‘Take your taxes back and build away.’”

Services from O-Net vary and, while triple-play packages are available, the network makes it easy for new applications to be developed (for example, a telehealth application allowing Doctors to interact with patients using their television). There is also a loyalty reward after 36 months of contiguous triple-play service -- they drop the price considerably. O-Net highlights the value of community owndership. From its website:

As Canada's first community owned and operated Fibre-to-the-Premises network is now lighting-up new orders, you are encouraged to support your community and help pave the way for your future, and the future of many generations to come.

You, the citizens of Olds, own this story.

Indianola Partners for Blazing Connections in Iowa

We have covered developments in the town of Indianola, Iowa, where the community decided to build their own network in 1998. The original purpose for investment was to use the network to enhance public safety and increase efficiency with SCADA applications. In 2005, however, the network began offering telecommunications services to local businesses. As of October, Indianola Municipal Utilities (IMU) began offering fiber-to-the-home to residents as it gradually begins expanding the use of its fiber asset.

You can now hear firsthand about the network, its history, and how the municipal utility navigated the journey to its next-generation open access network. Craig Settles interviewed Todd Kielkopf, General Manager of IMU, in an August Gigabit Nation podcast. The two discuss IMU's evolution since 1998. They also talked about the unique advantages that exist when a community considering network infrastructure investment already has a municipal utility in place.

Kielkopf tells how the driving factor for the fiber installation was to allow easier management and communication between utilities. When a 1990 franchise agreement with MediaCom was about to expire, the city investigated options. Hopes were that that the city could build a fiber network and MediaCom would offer services over that network, but that vision was never embraced by MediaCom.

Iowa law allowed the city to hold a referendum asking residents for permission to provide telecommunications services through the municipal utility's network. The referendum passed and they created a five year financial plan. Financing was with taxable and tax exempt bonds. The electric utility would build and own the network and a new telecommunications utility would license to a private partner that would offer retail services. Now, IMU and Mahaska Communication Group (MCG) have an agreement whereby MCG provides retail services over the network. While the agreement is not exclusive, no other providers currently use the network.

Kielkopf discusses three distinct phases in the development of the network's current status. First the network connected schools, libraries, government entities, and other anchor institutions. Next, IMU began connecting and serving businesses. Now, IMU is in the third stage of connecting homes. Along the way, says Kielkopf, the utility took its time and proved to the community that the investment was well spent and that IMU could manage the resource wisely.

Money saved on customers' telephone service, the willingness to work to finance installation, and treating customers well, contributed to IMU's positive reputation in the community. Accordingly, the community continues to support IMU's ambitions and goals for new uses of the network. The main objective for the network has been to provide a public necessity while paying off debt service and earning enough to maintain and improve the network. So far, IMU has met that goal.

In addition to cost savings and increased accessibility for Indianolans, IMU works with the local community college as part of an economic development program. Additionally, IMU is planning slow expansion and is committed to finding ways to simplify utilities and save energy for customers with the fiber network.

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Kielkopf and Settles also discussed challenges from opposition to community owned networks and the search for local champions to lead efforts. Kielkopf notes that being proactive and knowing where hot button issues may exist before they ignite can make or break efforts.

He also stresses how Indianola has consciously tried to be different than surrounding communities as a way to attract talent and economic development. As one of many bedroom communities in the Des Moines area, Indianola competes with other similarly sized towns for new jobs, residents, and other resources. Kielkopf sees a direct connection between the network and what Indianola has to offer its residents, two thirds of which commute to Des Moines every day. Businesses (and now residents) can't get this caliber of affordable, reliable, and fast broadband in local areas served by the private sector.

Lastly, Kielkopf notes that successfully managing utilities depends on strong research, testing, and growth from an already existing knowledge base. He suggests that communities recognize strengths and weaknesses and capitalize on them both when venturing into the realm of broadband. The strategy has proved successful for IMU, its partners, customers, and the community.

The new residential service from IMU and its partner MCG includes triple play service of 25/25 Mbps Internet, unlimited local calls, and 105 of the most popular digital television channels for $99.95. For an additional $10, residents can upgrade to 100/100 Mbps. Stand alone Internet service is available for as low as $39.95 for 25/25 and double play packages (data and phone) are also available for as little as $49.95. MCG provides a broad range of bundling variety and 25/25 is available for as little as $5 per month in some packages.

Hear more details yourself in the interview.

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Gigabit Nation Interview with Frank Caruso of Kutztown, PA

The Burough of Kutztown, Pennsylvania, with a year-round population around 5,500 that is swelled by Kutztown University, has been on the community broadband map for 10 years. In this informative Gigabit Nation interview, Craig Settles visits with Frank Caruso, IT Director for the Burough of Kutztown.

The interview is embedded below and runs approximately one hour and is sandwiched between a one hour interview with Chattanooga about smart grid economics and an hour interview with Todd Marriot about UTOPIA -- so if you want to hear the portion on Kutztown, skip 60 minutes into the show.

Kutztown award news article

In the interview, Craig and Frank discuss how the municipal network, Home Net, started out of necessity. The community wanted to link their utilities with a telecommunications network and government facilities needed a cohesive option. FTTH became part of the equation later, but was not the main impetus. Kutztown issued RFPs for a new network, but the response was silence. The community investigated the next option - building it themselves.

After several conflicting feasibility studies, the Burough decided to go ahead and build the network with the hope that "if we build it, they (ISPs) will come." Kutztown issued taxable bonds and built their own fiber network. The goal was to provide the infrastructure for government purposes and in the future create real choice for consumers. Again, no ISPs answered the call.

According to Caruso, large providers were not able to accept a business model which created a "middle man" between them and their customers. The only interest from the private market was from a small local telecommunications company that eventually leased a line from the city to expand their footprint for telephone service.

Caruso goes on to describe how, even though no companies were interested in an RFP bid, curiosity grew as the launch date approached. The Public Utilities Commission and the FCC met with Kutztown leaders to inquire but expressed no objections. Large telcos came to meetings and even spoke up about the design of the network, but none signed on to offer services over this incredible asset.

At the State Capitol, legislative changes changed the future for Pennsylvania communities who might follow Kutztown's lead. Interestingly, the Governor actually gave Kutztown an award (news article at right) just under a year before signing a bill to ensure no other community could duplicate their success. Pennsylvania was one of the first states to begin passage of crippling legislation (at the behest of Verizon) that has moved across the country. While Kutztown was grandfathered in and can continue to provide services, laws prevent any expansion. Caruso even fears new legislation may one day bring an end to Home Net.

As long as they are able to operate, says Caruso, they will continue to offer high quality service and find new ways to offer more options and better technology. Home Net provides fiber-ro-the-home at a take rate of 51%. Caruso credits much of the network success to the fact that customers receive service on a local level. They know the people who run the network and make the decisions. We previously ran a photo of one marketing campaign.

Settles and Caruso also discuss lessons learned. One of Caruso's key recommendations is separating government from business. He sees numerous possibilities in the nonprofit or coop model, especially now that state law prevents more municipal investment. In Kutztown, the network is administered by a Telecommunications Advisory Commission made up of residents. The entity is legally able to operate in a more competitive manner but is still answerable to community voices.

Operating under the purview of open meeting laws and the public sector's high level of transparency create competitive disadvantages for Home Net. Caruso comments on how business plans, prices, products, and other information closely guarded by the private sector must be disclosed early in the process by Hometown Utilitcom. Marketing efforts can be thwarted and promotions are often one-upped by the private sector before they even take effect.

Nevertheless, competition has been good for the community. The presence of another network has lowered rates for every consumer in Kutztown. Caruso calls it a win-win. He notes that over the course of 10 years, more than $8 million has stayed local because rates have reflected the competitive environment. The savings per household is about $375.

Caruso sees economic devlopment from the network as immeasureable. He sees better roads, fewer empty houses, more businesses operating on main street. He believes there are more home businesses, more online commerce for local businesses, and more data driven possibilities for extant large companies than there were before the network. Caruso returns again and again to what he considers a priceless benefit - an improved quality of life in Kutztown.

We encourage you to listen to the rest of the interview for a great discussion on the policy and practicalities of Home Net, municipal networks in Pennsylvania, and predictions for the future.

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One Maryland Fiber-Optic Broadband Project

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:

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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.