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History of the Quickly Subverted 1996 Telecommunications Act - Community Broadband Bits Episode 89

If all had gone according to the plan behind the 1996 Telecommunications Act, we would have lots of competition among Internet service providers, not just cable and DSL but other technologies as well. Alas, the competing technologies never really appeared and various incarnations of the FCC effectively gutted the common carriage requirements at the heart of the Act.

Earl Comstock joins us today to explain what they had in mind when they spent years developing the goals and text of the Act. A staffer to Senator Stevens - and yes, we discuss the legacy of Senator "series of tubes" Stevens and you might be surprised when you learn more about him - Earl helped to craft the Act and then had to watch as the FCC and Courts misinterpreted it.

At the heart of our conversation is what they believed would be necessary to achieve the goals of expanding access to telecommunications service to all.

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 30 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

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

Thanks to Valley Lodge for the music, licensed using Creative Commons. The song is "Sweet Elizabeth."

High Speed in the Blue Grass State: Russellville's Gig

The Logan Journal recently reported that the Russellville Electric Plant Board (EPB) now offers gigabit service to local businesses. The article notes that Net Index, an online tool to measure download and upload speeds, recognizes EPB as the first Gig city in Kentucky. To learn more about the community and its network, we talked with Robert White, General Manager of EPB.

The community of 7,000 is the county seat of south central's Logan County. Russellville is located in the center of several other larger communities: Nashville, Bowling Green, Hopkinsville, and Clarksville, Tennessee. Manufacturing has been a large part of the local economy for generations, but community leaders recognize the vulnerability of a narrow economic base. In order to encourage a versatile economy, Russellville invested in its telecommunications utility.

The community wants to encourage small business while simultaneously providing manufacturers the connectivity they need. Leadership sees the ability to remain competitive directly tied to their network. In addition to the economic development opportunities a fiber network can provide, communities like Russellville rely on electricity revenue from large consumers. Retaining the large electric consumers that also provide jobs in the community it a must.

Russellville's electric utility created a strong advantage when it was time to venture into telecommunications. EPB had already established a strong relationship with its Russellville customers, says White, and locals felt they could trust their municipal electric provider.

EPB began offering wireless Internet to the community in 2005; at the time, there was very little choice for wireless or wired Internet. The product was competitively priced and it performed well for wireless service at the time but EPB eventually shifted focus to its next generation high-speed network. The wireless service is still available to customers who subscribed prior to the construction of the fiber network but EPB no longer offers it to new customers. Wireless speeds vary from 1-2 Mbps download and approximately 500 Mbps upload. The area now has several options from the private sector - Verizon and Bluegrass Cellular provide wireless up up to 10 - 15 Mbps.

Russellville EPB Logo

According to White, Russellville's inspiration to build the network was not to compete, but to fill the services gap. He told us:

"We support Logan County residents having the best product. If that means us offering the product, that's fine. If it means the private sector will step up to the plate and serve the areas we can't serve…that's fine as well. We want our residents to be served, whether by us or an incumbent."

Larry Wilcutt, White's predecessor at EPB, began studying the possibility of a fiber network in 2007, but external forces motivated Wilcutt and EPB to seriously pursue the project a few years later.

In early 2010, EPB learned that its power supplier, the Tennessee Valley Authority (TVA), would switch to time-of-use wholesale rates and begin using smart grid technology by 2012. In order to participate in the new technology, EPB needed meters that could communicate with its electrical system operations. EPB installed fiber optics for Advanced Metering Infrastructure (AMI) and for future expansion into telecommunications. A News-Democrat & Leader article from October, 2010 (reprinted at MobilityTechZone.com) reported:

The EPB's goal is to eventually install fiber optic cable to every home and business in Russellville, is installing the cable to every home in the Russellville, city limits -- even those that are serviced by other electricity providers. There are also plans to include some locations outside of the city limits to extend service to the more populated areas adjacent to the city limits of Russellville. 

The article quoted Wilcutt:

"The Board has been working on this project for over two years and we are extremely excited to finally start construction on this project. We want to provide the citizens of Russellville with a system that is second to none, one they will be proud of, one that will entice new investment in the community. Whether that new investment is in the form of capital, technology or people, we believe the City of Russellville and Logan County will benefit well into the future" Wilcutt said.

AT&T Logo

At the time, the best connectivity in Russellville was AT&T's DSL at 6 Mbps download. Satellite Internet was available but was unreliable, expensive, and maximum speeds were 1 - 2 Mbps download.

The community was also starved for quality video service. Suddenlink did not offer HD channels and made it clear that HD service was not planned for Russellville. Large corporate providers had no interest in Russellville so EPB felt it was time to take control of their own connectivity.

Construction of the 99% aerial, 120-mile network began in October 2010; EPB began offering services in December 2011. White presented the results of an audit in November 2013 to the City Council showing that 8% of EPB's total revenue came from its broadband division. The audit also showed that the network was ahead of its projected take-rate with 1,300 active subscriptions out of 4,000 passed homes. 

The network capital costs were approximately $11 million with approximately two-thirds designated for electrical system expenditures. In 2010, the American Recovery and Reinvestment Act (ARRA) offered Build America Bonds (BABs), some of which provide federal subsidies to help communities pay back interest to bondholders. BABs, backed by electric system revenue, provided funding for the entire project and contributed to interest expenses.

EPB offers services to every home and business in its service area and hopes to expand further. They expected video to be the lead product, but  Internet service is the most popular. White considers the lack of high-speed Internet in the region the driving force. The commercial gigabit product is new and no customers subscribe yet but local businesses take advantage of the fiber network. One local contractor tells White he enjoys the ability to share documents and bid for projects online without fear of technical glitches. When he used unreliable DSL connections to transmit data, he was perpetually concerned about deadlines and the status of data sent via DSL.

Local public safety agencies, the local library, Russellville City government, and Russellville Independent Schools now use the network. EPB and the Logan County Schools may soon be working together.

Word of Mouth graphic

In addition to providing much needed connectivity to the community, the network provides an increased stream of revenue. EPB submits a payment in lieu of taxes (PILoT) to county and city governments based on electrical and broadband services revenue. As EPB gains customers transitioning away from satellite video service, its contribution to the City increases; satellite providers do not pay a franchise fee to Russellville. At a July 2010 City Council meeting, EPB expected broadband services to add approximately $25,000 in PILoT within the first five years. EPB also pays a separate and voluntary video franchise fee to the local municipality. 

These days, White and EPB are concentrating on raising awareness of the commercial gig product and service to residents. To spread the word, EPB holds regular workshops for the community to explore ways to maximize the the network's possibilities. Commercial gig service is available for $1,499.95 per month.

White and the EPB understand that the private sector must make decisions based on returns. In the case of this publicly owned network, some key returns take the form of benefits to the community. Since EPB lit its network, White and his crew often hear from customers who rave about their service. White says:

"They hate to pay electric bills but they say getting superior broadband services from EPB is all worth it."

EPB's residential fiber Internet services begin at 20/5 Mbps for $39.95 per month with higher speeds at 100/25 Mbps for $69.95 per month. Video services from EPB range from $29.95 per month to $62.95 per month with the option to add over 100 HD channels. Voice packages start at $14.95 per month.

For Chris' recent interview with White, check out episode #82 of the Broadband Bits podcast. 

Defender of Big Telecom Admits Copper Can't Compete

The incomparable Diane Rehm show on WAMU recently tackled the network neutrality ruling [listen to it there]. Guests included Cecilia Kang, Susan Crawford, and Jeffrey Eisenach from the American Enterprise Institute, a think tank famous for promoting what is best for massive, politically influencial firms. Jeff and I both took part in a debate about municipal networks a few years ago - watch here.

It is a good panel with numerous perspectives and back and forth. But I was surprised to hear Eisenach confirming a main argument Susan, myself, and many others have been making: that copper is insufficient. People like Eisenach are forever over-estimating what DSL can do, claiming that we don't need massive fiber investment.

But the conversation turns to Europe about 34 minutes into the interview and in explaining why he thinks Europe has fallen behind the U.S., he says "They are reliant on these 20th century copper networks which have real limits on the amount of speed that they can deliver."

Now, he was quoting in the previous paragraph, so he may claim that his recognition of copper limits was nothing more than a quote to someone else - but he quoted it quite approvingly. And most of us in the United States are stuck with that same technology as our only competitor to the local cable monopoly.

Make no mistake. We do need fiber networks, as even industry concedes in more and more cases - see Cox suddenly investing in FTTH - but we also need accountability. Just convincing big, unaccountable global corporations to invest in fiber won't improve our local economies as much as we need.

Colorado and Mississippi Test White Space Technology

We recently reported on the WhiteSpaces Pilot Project from the Gigabit Libraries Network (GLN). In order to find out the results in the trenches, we contacted two participant communities: Delta County, Colorado and Pascagoula, Mississippi.

The project connects libraries with vendors that supply equipment tapping into what has been television spectrum, or "white spaces." A Wi-Fi signal travels farther on white space spectrum and can travel through obstacles such as buildings and trees. 

The five libraries in the Delta County Libraries system serve a community of approximately 30,000 people. Most residents live on farms or in small towns scattered throughout the county. The libraries all offer free Wi-Fi and serve as places to socialize, connect, and hold community meetings. Library District staff installed the equipment in the library in Paonia, population 1,500.

TDS Telecom and Skybeam offer limited Internet access in the area, but many people do not live in the service areas or cannot afford the steep rates. John Gavan, IT Manager of the Libraries system, predicts that 90% of visits to the facilities focus on Internet access.

When the Delta County Library in Paonia closes down every night, the parking lot is usually filled with people tapping into the library's free Wi-Fi. The GLN WhiteSpaces Pilot went live in Paonia in October 2013. The library's Wi-Fi now sends a signal down the main street in town. They recently created a second hotspot to extend free Wi-Fi even farther. The community hopes to transmit the signal to a park located one mile from the library so summer festival vendors can to use the Wi-Fi for credit card transactions.

Gavan describes the technology as an easy set-up with minimal tech support from the vendor. The terrain in Delta County includes significant hills and trees. The ability to send the signal through obstacles is a major plus in Paonia, where the terrain can be challenging. As an IT Manager, he especially appreciates the ability to monitor and manage the white space network from any Internet connection.

The pilot project will run through 2013. Delta County Libraries will then have the option to purchase the equipment or to return it to the vendor. In Paonia, the equipment will cost approximately $5,800. According to Gavan, it is a small price to pay for the benefit the community receives from the technology.

Unfortunately, tough economic times have negatively impacted budgets in Paonia and Delta County. A proposed mill levy that would have paid for the equipment did not pass. One of the area's major employers - a coal mining facility - announced it will soon be closing down. The loss of jobs will remove $400 million worth of income from the region and community leaders are understandably concerned. Gavan and the Delta County Libraries have launched a Kickstarter campaign to raise funds to keep the equipment. They realize access to the Internet will be even more crucial as people search for employment.

Pascagoula Mississippi logol

In Pascagoula, Mississippi, the School District is also a pilot project participant. In addition to extending the school's Wi-Fi, the coastal community will explore public safety uses. Pascagoula was affected by Hurricane Katrina in 2005 and community leaders are considering white space technology for disaster readiness preparation.

Pascagoula also plans to use the technology to replace a DSL connection to their Adult Learning Center. According to Toby Bradley, School District Network Administrator, the connection will triple the bandwidth and save approximately $200 per month in service charges. Bradley notes:

We approached the pilot a bit differently than the other applicants, in that we were looking at rapid and easy deployment for both permanent and portable connections at a variety of locations that we cannot justify permanent Internet connections to our fiber network or the high cost of leasing services from an ISP on a regular basis. 

As time goes on, we will discover more sites, and expand our TVWS equipment inventory. It fills a niche between very expensive dedicated links, or expensive service contracts. We have also worked on simplifying setup and teardown, and we can have a remote site up and running in less than 10 minutes. Testing remote locations has allowed us to pre-program locations, sources of electrical power, antenna positioning, etc. 

Badley describes the technology as promising but notes that performance levels are inconsistent. He sees a fair degree of trial and error as the community learns the limits of the technology.

For more on the GLN WhiteSpaces Pilot Project, listen to Christopher interview Don Means in Episode 79 of the Broadband Bits podcast.

Big City Community Networks: Lessons from Seattle and Gigabit Squared

A few weeks ago, a Geekwire interview with outgoing Seattle Mayor Mike McGinn announced that the Gigabit Squared project there was in jeopardy. Gigabit Squared has had difficulty raising all the necessary capital for its project, building Fiber-to-the-Home to several neighborhoods in part by using City owned fiber to reduce the cost of building its trunk lines.

There are a number of important lessons, none of them new, that we should take away from this disappointing news. This is the first of a series of posts on the subject.

But first, some facts. Gigabit Squared is continuing to work on projects in Chicago and Gainsville, Florida. There has been a shake-up at the company among founders and it is not clear what it will do next. Gigabit Squared was not the only vendor responding to Seattle's RFP, just the highest profile one.

Gigabit Squared hoped to raise some $20 million for its Seattle project (for which the website is still live). The original announcement suggested twelve neighborhoods with at least 50,000 households and businesses would be connected. The project is not officially dead, but few have high hopes for it given the change in mayor and many challenges thus far.

The first lesson to draw from this is what we say repeatedly: the broadband market is seriously broken and there is no panacea to fix it. The big cable firms, while beating up on DSL, refuse to compete with each other. They are protected by a moat made up of advantages over potential competitors that includes vast economies of scale allowing them to pay less for advertising, content, and equipment; large existing networks already amortized; vast capacity for predatory pricing by cross-subsidizing from non-competitive areas; and much more.

So if you are an investor with $20 million in cash lying around, why would you ever want to bet against Comcast - especially by investing in an unknown entity that cannot withstand a multi-year price war? You wouldn't and they generally don't. The private sector invests for a return and overbuilding Comcast with fiber almost certainly requires many years before breaking even. In fact, Wall Street loves Comcast's position, as penned in an investor love letter on SeekingAlpha:

We're big fans of the firm's Video and High-Speed Internet businesses because both are either monopolies or duopolies in their respective markets.

Seattle Conduit

Seattle has done what we believe many communities should be doing - investing in conduit and fiber that it can use internally and lease out to other entities. This is a good idea, but should not be oversold - these kinds of conduit and fiber projects are typically deploying among major corridors, where the fiber trunk lines are needed. But networks require far more investment in the distribution part of the network, which runs down each street to connect subscribers. With this heavy investment comes the modern day reality that whoever owns the distribution network owns the subscriber - that owner decides who subscribers can take service from. (We have more conduit tips from previous Seattle coverage.)

Additionally, different conduit and fiber segments may be owned by various entities, including different departments within a city. This may introduce administrative delays in leasing it, suggesting that local governments should devise a way of dealing with it before a network is actually being deployed.

Even if a city wanted to lay conduit everywhere for the entire network (trunk and distribution), it would need to have a network design first. Different companies build different networks that require different layouts for fiber, huts, vaults, etc. Some networks may use far more fiber than other designs depending on the network architect preference. The result is a limit on just how much conduit can/should be deployed with the hope of enticing an independent ISP to build in the community.

In deciding the size of conduit and where to lay it, different types of fiber network approaches are either enabled or disabled (e.g. GPON vs Active Ethernet). In turn, that can limit who is willing to build a fiber network in the community. The same can be true of aerial fiber, attached to utility poles.

Investing in conduit and/or fiber along major corridors may go a long way to connect local businesses and some residents but almost certainly will not change the calculations for whether another company can suddenly compete against a massive firm like Comcast.

And paradoxically, beginning to connect some businesses with fiber and a private partner could make a citywide system less feasible. The firms that are prepared to meet the needs of local businesses may not have the capacity nor inclination to connect everyone. But without the high margin business customers among neighborhoods, a firm that wants to connect neighbors may struggle to build a successful business plan. Additionally, some firms may only be interested in serving high end neighborhoods rather than low income areas.

Community BB Logo

This is a major consideration in our continued advocacy for community owned networks. They have an interest in connecting businesses as the first step in connecting the entire community. An independent ISP may only find it profitable to focus on the businesses, though some ISPs share our values of ensuring everyone has access.

In the first Geekwire interview, Mayor McGinn returned to his original position when campaigning - that the City itself should be playing a larger role and investing its own resources rather than pinning its hopes on distant firms.

McGinn noted that “we haven’t given up on the private sector,” but said that if he were continuing as mayor, he’d start garnering political support to build a municipal fiber utility. That’s actually something the mayor considered back in 2010, after a consultant recommended that the City find a way to build an open-access fiber-to-the-premises communication infrastructure to meet Seattle's goals and objectives.

A feasibility study looking at one particular way of building an open access fiber network put the cost at $700-$800 million. However, there were other alternatives that they did not pursue, opting instead for a far less risky (and with far less payoff) public-private-partnership with Gigabit Squared.

Over the next few days, I will explore other lessons. A review of lessons from today:

  • Comcast and other cable companies have tremendous advantages that other would-be competitors in the private sector will generally fail to overcome
  • City owned conduit and fiber helps to encourage competition but is subject to significant limitations
  • Communities should invest in conduit in conjunction with other capital projects but should not inadvertantly weaken the business case for universal access

Update: The Gigabit Squared deal with Seattle is officially dead. Part II of this series is available here.

WUNC Radio Show Explores Muni Network Restrictions in North Carolina

WUNC, a public radio station out of Chapel Hill in North Carolina, covered community owned networks and broadband availability on its recent "State of Things" midday program. I was a guest along with a local resident and a public relations executive from Time Warner Cable to discuss North Carolina's broadband compared to other states and its law that effectively bans local governments from building networks.

The discussion is good, though I certaily could have done a better job. Ultimately I thought the host did a good job of bringing in each guest to make their points, though Time Warner Cable was totally unprepared to talk about how North Carolina can expand access. Instead, they talked about the cable giant's requirements to invest in networks in rural areas.

We are going to follow up on these points but for now wanted to make sure you have a chance to listen to the show. Our coverage of the bill discussed in the radio show is available here.

Mark Creekmore Takes on Windstream - Community Broadband Bits Podcast #69

Earlier this year, Mark Creekmore transitioned from a frustrated DSL customer to a champion for better Internet access in Georgia. A concerned citizen and tech consultant, Mark joins us for the latest Community Broadband Bits podcast. He discusses his history with Windstream and the steps he went through to improve his Internet access.

Along with this interview, you can read a how-to guide he wrote on DSL Reports.

Mark documented the times his connection speeds fell, his calls to tech support, and their inability to deliver what they promised. Finally, he helped the CBS Atlanta affiliate to cover Windstream's failure to deliver service in this video.

CBS Atlanta News

We became aware of Mark as he became aware of Windstream's efforts to revoke local authority from local governments to build networks that would deliver the services that Windstream would not. Read our coverage of those legislative fights from 2013 and 2012.

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 22 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

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

Thanks to Mudhoney for the music, licensed using Creative Commons.

Hilarious Video Compares Fiber to the Home with Fiber to the Node

Another great video from Australia makes many salient points regarding the debate over their national broadband network. One key point to take away is that it is possible to talk to non-technical normal people about this subject without overwhelming them or boring them.

Another is that FTTN = fiber to the nowhere, not fiber to the node.  

When it comes to building infrastructure, we should make smart long term investments. That said, we are strongly supportive of locally owned, fiber networks. Local ownership trumps national ownership because proximity lends itself to accountability.

Video: 
See video

Small Minnesota Town, Annandale, Fed up With Slow DSL

Yet another Minnesota town is fed up with slow, unreliable Internet access and is examining what it can do to make sure it has the network it needs to succeed in the modern economy. Annandale is 50 miles northwest of Minneapolis with a population of 3,200 and has Windstream as the telephone company.

Windstream, as with other large firms that primarily serve rural America, offers a DSL more suited to the late 1990's than 2013. It has little capacity to invest in better networks, even if it had the willingness. We've covered Windstream several times in previous stories.

After a flood of complaints from residents to City Hall about slow speeds and frequent outages, the City issued a request for proposals for a feasibility study that will explore alternatives to the present reliance on Windstream.

Local leaders understand that the private sector is not likely to invest significantly in its community due to its density and rural location. But the town needs modern Internet access to retain and attract good jobs. The Annandale Advocate newspaper ran a story on September 17 but it is not available for non-subscribers.

At a chamber of commerce meeting later in the week Gunnarson added that strong broadband is a basic, essential feature of modern commerce.

"New businesses expect good Internet. When you buy a car you expect tires on it. Unfortunately, our car has wooden tires," he said.

logo-annandale-advocate.jpg

The same paper published a guest editorial by City Council members to explain how little power the City has over private providers. Many people falsely believe that towns are actively keeping competition out:

We even had some people angrily ask our staff why are we keeping the competition out. So to set the record straight, the city can't do much about it because it is all private wires, equipment, operations and corporate customer service.

Also, a recent call to the PUC, the Public Utilities Commission, confirms that not much can be done since broadband is not regulated. Sorry folks. As far as letting in competition, we have zero say in that. Any other provider can come in any time. In fact, many of us citizens would throw the welcome party.

If any provider believes it is being denying the right to offer service in Annandale, there is a legal process to rectify the situation. Since 1992, no local government has had the power to offer a cable monopoly and the same is true for telephone or Internet access since the 1996 Telecommunications Act.

The problem is not local governments, it is the extremely high cost of building networks and the difficulty of competing with entrenched incumbents that can lower costs temporarily to deny subscribers to new networks.

Annandale has not committed to any specific course of action; it is gauging what opportunities are available and how a business model might work. And like most towns, they are leaving the door open to working with the incumbent:

Does our current provider still have an opportunity to be rock star in Annandale? They sure do. They just need to upgrade and make the city hall phone stop ringing.

A CBS Atlanta investigation has previously found that Windstream blatantly lies to consumers about their services.

CBS Atlanta News

Given Annandale's size, it is impractical to build a standalone triple-play FTTH network but it may find that an incremental fiber approach could work. Start with municipal facilities and businesses and expand to residents as necessary. Without a strong cable provider, most households probably already have a satellite TV service. This would leave open the possibility of doing an Internet and telephone double-play as Longmont, Colorado is doing. They could also partner with another network that wants to expand.

Regardless, you can expect the same big companies that refuse to invest in Annandale will publicly argue that the town should do nothing. But doing nothing is the best way to ensure nothing changes.

Monticello Fiber Price War Offers Key Lessons for Broadband Competition

Monticello Minnesota may be located 40 miles outside Minneapolis, but it is the center of the planet when it comes to FTTH competition. We have tried and cannot identify another community localed on planet earth with two separate FTTH networks going head to head across the entire community.

We have long written about Monticello, most recently to look at hypocritical criticism of the project (which gives me an opportunity to note a similar dynamic in Lafayette, Louisiana). And we have covered the disappointing news that the network has not produced enough revenue to make full bond payments.

Short explanation for how Monticello came to be unique in having two FTTH networks: Monticello had poor Internet access from Charter and telephone company TDS. Each refused to invest after local businesses and elected officials implored for better networks. Monticello started building its own FTTH network (Monticello FiberNet) and TDS sued to stop the project while suddenly decided to upgrade its slow DSL to fiber. Lawsuit was tossed out and Monticello finished its network.

In most community fiber networks, the DSL provider seems to fade away because it cannot offer the fast speeds of fiber or cable, so the market basically remains a duopoly with the community network replacing the telephone company (which continues to offer cheap, slow DSL to a small number of customers). But in Monticello, Charter and TDS engaged in a price war, which has really hurt the City's ability to generate enough revenue to pay its debt.

Price wars are very hard on new market entrants because they have to amoritze the cost of their investment whereas the incumbents often have already done so. This means incumbents can almost always offer lower prices if they are determined to do so.

In many communities, we have lacked clear evidence of predatory pricing - that is pricing below the actual cost of service to run competitors out of business. This would violate federal law (if any agency bothered to enforce it). Charter gave us that evidence in Monticello.

Since then, the deals have remained amazing in Monticello, far surpassing what cable-funded crazy people in DC pretend is competition between DSL and cable in the majority of the country.

TDS is now offering a deal that far surpasses anything available in the Minneapolis/Saint Paul metro - over 190 channels (including DVR and HD), 50 Mbps Internet (50 down, 20 up I believe), and telephone for $70/month for one year with no contract. The price goes up after year one, but doesn't go back to full price until after year 2 ... at which point you will likely get another deal if there are still more than 2 high speed choices in the market.

TDS Advertisement

TDS is also regularly running full page advertisements regularly in the local newspaper. How many local newspapers would love to see regular big-ad buys like this one? If enough communities build networks, perhaps the resulting advertising bumps will help local newspapers stay in print!

Charter has gone beyond newsprint and static billboards with a big truck advertising Monticello residents a free DVR that will save them $650/year (which is phrased in a way that makes you think they are charging WAYYYY too much for DVRs!).

Charter Advertising Truck

These advertising strategies are in addition to many door-to-door sales people from both TDS and Charter. Both are boosting local employment opportunities for these sales people far beyond what they would do absent Monticello FiberNet.

Existing Charter customers outside of Monticello might be interested in how cable promos in Monticello compare to in their communities where there is no real competition for the cable giant. Here is an 8 page glossy advertisement they have been using [pdf].

Charter is also going after small businesses with a 30 Mbps asymmetrical package for $55/month when bundled with business phone. I can only imagine how many businesses in areas without a real choice would like that deal.

Monticello FiberNet Biz Services

Charter Small Biz Advertisement

However, the Monticello FiberNet business service is far superior, particularly as it is symmetrical and fast upstream makes a huge difference for local businesses. Business services from the city owned FiberNet starts 10 Mbps symmetrical at $41.95 and the list sheet tops out at 100 Mbps for $350/month.

Update: Fibernet Business Services prices have decreased on the faster Internet connections. 30 Mbps symmetrical is $99/month and 100 Mbps symmetrical is $199/month.

We don't have enough information to compare what it would cost a business to connect multiple sites with point to point gigabit links, but we would guess there could be more than $1,000 savings each month from such a service based on FiberNet pricing vs Charter or TDS.

Going through all these deals, a few things have become apparent.

First, DSL and cable are not engaged in real competition. Adding a third player really changes the market in ways that satellite and 4G wireless Internet do not.

Second, most of the competition from the big corporations is aimed at taking subscribers from rivals by temporarily lowering prices rather than attempting to keep their own subscribers happy with their services. Most of the deals are only available to new customers, incentivizing households to regularly switch providers, which is costly to all competitors (churn). Community owned networks by contrast tend not to offer these short term promo deals and invest in keeping existing subscribers happy.

Third, the strategy of TDS and Charter would not be possible if they were not cross-subsidizing from distant, non-competitive markets. They may not be losing money on all the customers that take these deals, but the increased marketing costs and extremely low priced deals are aimed at driving a competitor from the market, not at merely preserving market share. Their ability to cross-subsidize (and the initial frivolous lawsuit) have damaged Monticello's business plan to the point where it has had to transfer public funds from the liquor store and negotiate with bond holders over a significant haircut.

And finally, whatever this network may end up costing city taxpayers, it will likely be less than the savings from all of these lower prices and indirect benefits such as not losing employers that could not be competitive when only having last-generation Internet access from unreliable DSL. That doesn't help the City to make its debt payments, but it sure makes Monticello a better place to live.