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MI-Connection Shows Solid Growth in North Carolina

Ever since the towns of Mooresville and Davidson purchased and began fixing the failed Adelphia franchise in their part of North Carolina, private sector purists have tried to portray their efforts as a disaster. MI-Connection has had some serious difficulties amid higher than expected costs, but just reported a promising increase in revenues.

At their monthly board meeting at Davidson’s Town Hall on September 22, Transition Manager David Auger said that, from July through September, the system had increased its voice customers by 48 percent over the first quarter last year, its video customers by 296 percent and its data customers by 2,248 percent. 83 days of the gains, said Auger at the time, were actual, and 9 were projected, since September was not yet over.

The final customer numbers, which the system released today, showed that the last few days of September growth activity exceeded projections: voice customers grew by 60 percent over the first quarter last year, video customers by 319 percent, and data customers by 2257 percent.

This network was targeted time and time again by Time Warner Cable and its allies in pushing the anti-competitive bill that has effectively stopped any investment in next-generation networks in the state by killing local authority to make broadband investments.

They regularly blamed the network's problems on the local governments owning it while providing no context -- the network was in terrible shape because its prior private-sector owner saw little reason to invest in it. The network is now far superior because the local governments care more about encouraging economic development and creating local jobs than producing a quick profit for out-of-state shareholders.

As MI-Connection continues to correct its problems, Davidson's government is remarkably open and transparent. You can read just about all the documents relating to the network, finances, and history here.

Greenville: The Texas Muni Cable Network

If you the take a look at our community broadband map, you'll see that Texas has only one citywide wired network owned by the public: Greenville. The story behind it is the same story we hear from just about every other community - but they actually spelled it out on their history page.

In 1999, Greenville, Texas' economic development leaders were unable to attract certain businesses and on the verge of losing existing companies due to a lack of high speed Internet.

In response, Mayor Sue Ann Harting asked SBC for a commitment to deploy DSL. That request was denied. The city's cable franchise, Time Warner, also declined to commit to cable modem Internet deployment.

Greenville found itself in a situation similar to one that many towns had faced years ago when railroads changed transportation. If the railroad was not routed through a town, that town just might die. What would happen to Greenville if the information superhighway did not come through the city?

Incumbent cable and telephone companies, their lobbyists, and associated "think tanks" like to claim that communities are somehow "duped" into building publicly owned networks. The truth is that just about every community wants to avoid the hassle of building a network but incumbents refuse to invest sufficiently to keep the community competitive for economic development and a high quality of life.

They build networks when backed into a corner, not because they want to. Fortunately, all that hassle almost always pays off with far more benefits than problems over the long term as communities transition from depending on some distant corporation to solving their own problems locally.

In fact, the results are often like that of Greenville:

Greenville citizens were not willing to take that chance. They took destiny into their own hands by amending the city charter to allow their revenue-only supported, municipally-owned electric system to build a hybrid fiber coaxial system to make high speed Internet available to everyone. Digital cable TV was offered as an option on that same system.

Once the citizens had committed to this venture, the city's incumbent telephone and cable franchises found ways of deploying that high speed Internet that they had only recently declared not feasible in Greenville.

In 2001, citizens began connecting to the city's state-of-the-art system that accessed all 10,000 of the homes and business in Greenville. Public acceptance has been very good, with more than 4,500 of those homes and businesses (as of June 2005) now choosing the new municipal services after less than four years in business. Financially, this non-tax supported venture was seeing black ink earlier than expected.

Public acceptance readily came from slightly lower cost to the consumer plus faster Internet speeds and more cable TV channels than the incumbents offered. (The existing cable company wasn't even offering ESPN 2 in 2000). Consumers also welcomed the chance to have these multiple services placed on one bill with "one-stop" local customer service to handle all of the municipal services - one inclusive bill for water, sewer, garbage, electric and cable TV and Internet as options.

After the community built its network, the incumbent providers finally upgraded their services and undoubtedly lowered their prices. The local Chamber of Commerce has this to say about the public investments:

Greenville is fortunate to have its own non-profit, locally operated municipal electric, digital cable television, high speed Internet, water, and wastewater utility systems. 

Unfortunately, Texas is one of the four states that have made it all but impossible for other communities to copy Greenville's success. And as long as AT&T can dump millions into the Legislature, that law will be hard to change.

Publicly Owned Broadband Networks: Averting the Looming Broadband Monopoly

Publication Date: 
March 23, 2011
Author(s): 
Christopher Mitchell - Institute for Local Self-Reliance

The Institute for Local Self-Reliance is pleased to release the Community Broadband Map and report, Publicly Owned Broadband Networks: Averting the Looming Broadband Monopoly. The map plots the 54 cities, big and small, that own citywide fiber networks and another 79 own citywide cable networks. Over 3 million people have access to telecommunications networks whose objective is to maximize value to the community in which they are located rather than to distant stockholders and corporate executives.

For several years ILSR has been tracking telecommunications developments at the local and state level. We have worked with businesses and communities protecting their right to self-determination via the fundamental infrastructure for the information-based economy. This report offers some of our findings.

The Looming Cable Monopoly

Publication Date: 
December 1, 2010
Author(s): 
Susan Crawford
Publication Title: 
Yale Law and Policy Review

Susan Crawford has coined the expression "looming cable monopoly" to describe important changes in the Internet access arena. We have long discussed the ways in which FTTH represents a natural monopoly -- the first entity to build a FTTH network is likely to be the only one. What we haven't discussed how cable networks are similarly edging DSL-dependent telcos out of the market.

Fortunately, Susan Crawford has recently been casting light on this trend -- and her work has been picked up by Ars Technica.

The short version is this: upgrading cable networks to offer fastest speeds is much less expensive than upgrading DSL networks. Something not often mentioned: aside from AT&T and Verizon (who effectively mint dollars with their mobile revenues), the telephone companies have no money to upgrade their DSL networks anyway.

When the FCC took a look at this situation, they concluded that what little competition we have for broadband in the US is about to decrease (something we have long argued is a result of relying solely on the private sector for essential infrastructure). From the National Broadband Plan [pdf] on page 42:

Prior to cable’s DOCSIS 3.0 upgrade, more than 80% of the population could choose from two reasonably similar products (DSL and cable). Once the current round of upgrades is complete, consumers interested in only today’s typical peak speeds can, in principle, have the same choices available as they do today. Around 15% of the population will be able to choose from two providers for very high peak speeds (providers with FTTP and DOCSIS 3.0 infrastructure). However, providers offering fiber-to-the-node and then DSL from the node to the premises (FTTN), while potentially much faster than traditional DSL, may not be able to match the peak speeds offered by FTTP and DOCSIS 3.0.

Thus, in areas that include 75% of the population, consumers will likely have only one service provider (cable companies with DOCSIS 3.0-enabled infrastructure) that can offer very high peak download speeds.

To be clear - those "very high peak download speeds" they are discussing today are tomorrow's "normal" speeds. For most Americans, the only way they will have a choice in broadband providers is if they settle for the future equivalent of dial-up connections. This reality is either terrible news, or signs of "robust competition" if your body is on the FCC and your head is stuck in the sand. Read more...

Putting Shareholders and Profits ahead of the Community

One of the key differences between community owned networks and those driven by profit is customer service. Community-driven providers spend more and create more jobs in the community to ensure subscribers' needs are met. The massive private companies instead choose to outsource the jobs to call centers (sometimes in the U.S., sometimes outside) in order to cut costs (and jobs - see the report from the Media and Democracy Coalition).

We've seen a few examples of the big carrier approach in this arena - as when Cablevision billed apartment residents $500 after a fire for the DVR that was consumed in the blaze... stay classy, Cablevision.

Another difference between community networks and the big carriers is that big carriers see little reason to upgrade their anemic networks to ensure communities remain competitive in the digital age. As Free Press has long documented [pdf] big companies like AT&T have been investing less in recent years as the U.S. has continued falling in international broadband rankings.

Up here in Minnesota, Qwest has invested in FTTN - what they call fiber-to-the-node. We call it Fiber-to-the-Nowhere. For those who happen to live very close to the node, they get slightly faster DSL speeds that are still vastly asymmetrical. Meanwhile, Qwest has branded this modest improvement for some as "fiber-optic fast" and "heavy duty (HD)" Internet, misleading customers into thinking they are actually going to get faster speeds than Comcast's DOCSIS 3.

Much as I hate to praise the middling DOCSIS 3 upgrade, it certainly offers a better experience than any real results we have seen with Qwest. But as we carefully documented in this report, community networks offer more for less.

Two friends recently moved to Qwest. One, J, was convinced by a Qwest salesperson that Qwest would be much faster so he signed up for a 20Mbps down package. Fortunately, he didn't cancel the cable immediately because he was back on it quickly - he says Qwest dropped out 4 times in the day he had it (before cancelling it). He never saw downstream speeds faster than 6-8 Mbps and the upstream never even hit 1Mbps.

Another, E, signed up for Qwest's 40 Mbps upstream / 5 Mbps downstream service. Being a rather technical guy, he tried a variety of speedtests as well as FTP transfers from non-rate limited servers. Never saw 40/5 but did see a best of 37/4.5 (not the same iteration) at one point. Most of the results where around 50-60% percent of the promised speeds, with some extremely slow results mixed in.

Bear in mind that cable compares favorably right now, but with household traffic increasing some 30% every year, sharing that cable connection with hundreds of neighbors starts to look like gridlock in the near future.

This is what one can expect from a provider that puts profits and shareholders before the needs of the community -- including an honest representation of what people are buying.

Spanish Fork Telephone Benefits Community

Spanish Fork, a well-regarded community broadband network, is now offering triple-play services on its hfc network. Previously, the town was offering broadband and television but recently added telephone after feeling the time was right.

From the article:

John Bowcut, director of Information Systems for Spanish Fork, said 15 percent of homes signed up when told telephone service was available over the cable. The network only used door hangers to advertise at first because it intended to have a slow rollout. Then the service was promoted in the city newsletter.

SFCN's phone rollout was slow for a reason. Small neighborhoods were notified one at a time, which allowed the network to handle the load. Bowcut said they didn't want to open sign-ups citywide and then have to tell people their connection date was three months out. He said the most people had to wait this way was 10 days.

Initially about 1,500 homes signed up for phone service, out of 5,534 homes in Spanish Fork.

The new telephone service runs an economical $14.95 with a variety of features. 75% of the town takes at least one service from the network, perhaps because of the great customer service:

Perrins was a beta tester for the system. He thought going through that process was awesome. They fixed every problem quickly and fine-tuned the network. "It was fun because the employees were so excited and eager to find and fix the problems."

Prior to the telephone rollout, only some 60% of the community took a service from the network, as explained in this article

About 60 percent of Spanish Fork residents already subscribe to SFCN's cable TV and high-speed Internet. The customer appeal of the city-run communications utility is that Spanish Fork provides both the infrastructure and the service -- a practice that was actually outlawed by the Utah Legislature in 2004, though Spanish Fork was grandfathered in.

This means SFCN can cut out any middle-man service provider, which amounts to about $2 million in savings each year, Mayor Wayne Andersen said.

"I think it was a sad day when the state Legislature put the kibosh on that sort of thing," Andersen said. "This is our baby, and as long as we keep it running and working, it's ours."

This is an interesting development -- many networks are seeing fewer customers signing up for telephone services. Yet it appears to be quite popular in this community.

What is the difference when a community owns the network?

"Phone companies have been a little unfair with their customers," Bowcut said. "The cost of delivering voice service has continually gone down and the customer hasn't seen that decrease -- it's about time."

And yes, for those who care only about a private sector accounting model, the network runs in the black.

Community Broadband Network in Braintree Massachusetts Voted Best Internet Provider

Back in 1998, the Braintree Electric Light Department (Massachusetts) built an HFC network for remote monitoring of their electrical services. In 1999, they extended the network to become the first broadband provider in town.

With about 1,500 Internet customers solely from word-of-mouth advertising, BELD staff looked to expand the offerings from its HFC network. In 2000, a cable television plan and $3.5 million bond issue were approved at Town meeting. State-of-the-art digital cable service was launched before the end of that year, and by the end of 2001, BELD was serving 4,000 cable and nearly 3,000 Internet customers.

As a measure of their success, citizens just voted BELD Broadband the top ISP of the area for the 3rd year in a row ...

The town also voted the department Best Cable TV Provider (for the second year) and Best Phone Service in 2010, casting votes via BestOfSurveys.com with Market Surveys of America, an independent survey company and member of the Better Business Bureau.

You can follow BELD Broadband on twitter.

Scottsboro Reports Increased Interest in Fiber Network

Sounds like the Scottsboro Electric Power Board is doing well. They offer fiber-optic services to businesses in addition to the cable services they offer to the general public.

Our Cable employees have also had a busy summer. We are experiencing a good bit of growth in business phone line installations and fiber optic data installations. Our phone partner Knology (based in West Point, Georgia) is doing a great job for us. Knology provides the telephone switching and long distance connections so we can concentrate on customer connections and customer service.

Knology seems to have partnered with a number of muni networks to offer telecom services.

Click! Partners with Community Media to Push Local Content

The American Cable Association has profiled Tacoma's Click! network. Click! is an HFC network owned by the city, via the public power utility. Tacoma Power only offers one retail service: cable television. Voice and broadband data services are provided by independent services providers who use the network on an open access basis.

The network has been quite successful. Some 25,000 households subscribe and it has kept competitor rates (Comcast, for instance) far lower than nearby Seattle, for instance. I previously noted the economic development victories attributable to the network.

"If you're a cable TV customer or an Internet customer of any company in our footprint, you pay between 35% and 49% less than if you are not in our footprint," said Diane R. Lachel, Click! Network's Government and Community Relations Manager. "That's really significant. That's what the Telecom Act of 1996 was all about. That's the kind of competition Congress intended."

Other communities aspiring for successful networks should study the approach of Marketing and Business Operations Manager Mitch Robinson. Click! has embraced local content - something every community should do to differentiate itself from absentee-owned incumbents.

One Robinson innovation was the localization of video-on-demand (VOD). The inspiration for this product was the lack of Tacoma community news from the TV stations based in Seattle, about 30 miles northeast of Click!'s headquarters. Tacoma tends to make the local TV news mostly when the news is bad.

In response, Click! decided to build relationships with a multitude of local nonprofits to create a steady inventory of VOD segments exclusively available to Click! viewers.

One VOD service, called Safe Streets, shows how to energize a neighborhood by curbing gang activity, setting up block watches, cleaning up derelict properties, and scrubbing away unsightly graffiti.

Click! also has exclusive VOD rights with The Grand Cinema, a local independent movie theater that also sponsors local film festivals. Through the Click! partnership, local film makers expand their viewing audience to customers hungry for local content.

"We just continue to add hours and hours of that type of exclusive content," Lachel said.

They also offer tech tutorials to teach their customers how to take advantage of Click! services, something that has been extremely popular with subscribers.

Many of these benefits to the community are ignored when critics attack community broadband networks purely on whether the network runs in the red or in the black. This network offers a unique outlet for local community media, as well as truly competitive broadband market -- something most will only have if their community builds and owns the necessary infrastructure.

10 Years Later - Tacoma and LaGrange

In January 2001, or about 1 million years ago in tech time, Site Selection Online published "Wired Cities: Working-Class Communities Build Next Frontier of High-Speed Connectivity". I found it years ago when reading up on the Click! network in Tacoma, Washington.

I recently stumbled across it again and thought it might be interesting to evaluate its claims after a decade (or close to it) had passed.

The lead of the article discusses Tacoma its relationship to Seattle. Tacoma had extremely poor connectivity from the private sector and its public power utility decided to build an HFC network to extend broadband to everyone in the community. Tacoma's Mayor notes that over 100 companies poured in after the community solved its own broadband problems - generating some 700 jobs in 18 months.

Fast forward to today, and this paragraph:

As a result, the next frontier of information companies isn't being confined to the Silicon Valleys of the world. It's taking root where you might least expect it: in places like Tacoma, LaGrange, Ga., and Blacksburg, Va.. And in most cases, it's government taking the lead, beating business to the punch by stringing fiber and building networks in working-class communities that most bottom-line corporations would otherwise ignore.

The principle of self-reliance is timeless. And we see the same idea in news articles today: local governments bringing broadband to areas the private sector cannot. In 2010, the fastest and more affordable broadband networks in the US are not in Silicon Valley -- they are in Lafayette, Chattanooga, Wilson, Utah, and other places where the community decided to prioritize big broadband.

Because of the competition in Tacoma, prices for telecom have remained lower than in nearby Seattle - as I quoted a Tacoma resident previously:

I have Comcast in Tacoma and all I know is since there is competition down here Comcast is about half the cost as it is in Seattle. They give you a rate good for a year. When your year is up you call up and just say Click! and bam back down you go. A friend in Seattle once called Comcast with both of our bills with similar service and mentioned my price and they said I must live in Tacoma and they wouldn't match the price.

Seattle continues to be plagued with traffic jams, one of the factors that had previously led some businesses to relocate to Tacoma when the bandwidth had become available. Now, Seattle has asked Tacoma for broadband advice on building a network.

In Georgia, LaGrange was noted by Site Selection for its fiber-to-the-business infrastructure (which helped it win the "Intelligent City of the Year" award. A Wired article noted:

"The city could have died when its textile industry faded. But instead they built fiber-optic networks, and offer(ed) low-cost broadband services to local businesses and the town's citizens. They should be commended. Too many small towns simply build an industrial park and offer relocation assistance to lure companies in. LaGrange offers all of that, and sophisticated Internet infrastructure. They understood that big bandwidth wins business for small cities."

Communities similarly afflicted by the loss of textiles and tobacco have used public investments to build impressive broadband networks, reversing their decline -- most notably Bristol and Danville in Virginia and Wilson in North Carolina.

Back in 2001, LaGrange had also snagged headlines with an experiment - offering free Internet access to everyone in the City via a TV-web interface. These are the kind of experiments communities are free to do when they control the infrastructure.

Once again, the trends we see today have changed little over the previous ten years - quoting again from the Site Selection article:

Like most rural towns its size, LaGrange faced a choice in the early 1990s: either build this network itself or get bypassed by the New Economy. "The big telecom companies in Atlanta made a business decision not to provide broadband service here," says Jeff Lukken, mayor of LaGrange and operator of the local Chevrolet dealership. "We approached BellSouth about partnering with them to build such a network, and they said no."

According to Martin Gidron, managing editor of the UT Digest in Silver Spring, Md., LaGrange is far from alone. "Generally, the small towns around America tend not to be able to get the broadband networks from the big companies," he says. "But for the towns it's a matter of economic development and economic survival. The tier-one cities are already pretty well served, so the movement now is toward second- and third-tier markets."

The Site Selection article also discusses Virginia's strategy for expanding broadband access:

Virginia also deregulated its power industry last year -- a move Upson says will encourage companies like Virginia Power to accelerate the growth of broadband services throughout the state. "Unlike some other states, we rely completely on private networks and encourage the building of those," he adds. "Virginia Link is the answer for businesses. There has to be that private-sector initiative."

How well did that work out? Virginia's hopes for the private sector to build the infrastructure has hardly distinguished the state. Over the last ten years, investments in next-generation networks have come from the public sector where they are able as Virginia has since preempted local authority to duplicate the successes of BVU in Bristol. One wonders if another ten years have to pass before the state legislature understands the private sector has no interest in building the networks Virginians need to be competitive in the modern economy.

Too often we fail to look back and see what lessons we can learn. Communities that help themselves tend to succeed whereas those dependent on absentee businesses tend to suffer.