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In Georgia, Monroe Muni Network Created Jobs, Lowered Bills

As we monitored Georgia's HB 282, a bill to limit the capacity of local governments to invest in Internet networks that spur economic development, we learned of many existing networks that have helped communities to thrive.

Brian Thompson, Director of Electric and Telecommunications in Monroe took some time to tell us a little about their city network.  Located in the north central section of Georgia, with a population of 13,000, the network now offers triple play services to residents and businesses. Its network started in the 1970s with a municipal cable tv network. Today, the network is a hybrid with fiber having been added as an expansion to its cable network.

Monroe's investment in its fiber began as a way to improve connections for education. The Walton County School District could not find a private provider willing to collaborate on an affordable network between school facilities. The city took on the challenge and built a point-to-point network which the School District paid for in 10 years. In the mean time, the city expanded its network in other areas. Now, the Walton County Schools have gig service between facilities and to the Internet. The District pays only $500 per month for a service that would cost five times more from a private provider.

Thompson also confirmed what we hear from other communities with publicly owned networks - prices for business and residential services are very competitive and service is superior. He notes that customers often express appreciation for local representatives, rather than dealing with a huge bureaucracy like those at Verizon or AT&T. New connections can be created in a matter of hours or days instead of weeks.

Residential service for Internet access from MonroeAccess.Net includes affordable basic service (1 Mbps / 256 Kbps) for $21.95 per month. Two faster tiers include $34.95 (6 Mbps / 512 Kbps) and $44.95 (15 Mbps / 1 Mbps). Cable tv rates vary from $15.50 to $62.95 per month and residential phone service starts at $29.95 per month. Thompson notes that, when Monroe added phone service, rates dropped for every one regardless of carrier. 

There are over 100 fiber customers and the network has been critical for economic security. T1 connections for businesses used to go for $1,000 per month; now higher capacity connections cost $250. Notable customers include Minerva, a beauty salon supplier with a large showroom and distribution center in Minerva. The multi-million dollar salon equipment company has headquarters in China but has nearly 30,000 customers in the U.S. Company owners required a fiber connection to communicate with the facility in real time. Monroe was happy to oblige.

Hitachi Logo

Monroe is also home to a Hitachi plant that makes parts for several auto companies. The fiber network allows the plant to communicate efficiently with the Hitachi headquarters located in Harrodsburg, Kentucky. The plant employs about 250 people.

Monroe never borrowed or bonded to build out its network. Thompson tells us the network has always progressed slowly and community leaders leverage partnerships with local interests along the way. The city used its capital investment fund for initial construction and continues to expand slowly with revenue obtained from offering services. Thompson tells us that their approach works for Monroe and shudders at the thought of legislators in Atlanta claiming otherwise.

Monroe's network travels well outside the city limits, over a nine county area, and HB 282 could have put an end to its expansion. Fortunately the bill was defeated on the House floor and for at least one more year, this community does not have to worry that the state will revoke its power to encourage economic development locally.

Broadband 101 Fact Sheet

We are pleased to announce our most recent Fact Sheet - Broadband 101! Most of the people following our work already know these key details but you also know people who are confused and perhaps intimidated by Internet issues.

Enter, the Broadband 101 Fact Sheet [pdf]!

We cover basic terminology, traditional technologies to deliver broadband, and common policy goals. We also explain why fiber optic connections are so popular lately and why neither we nor Wall Street expects robust competition in telecommunications.

This publication joins our previous fact sheets that explained how community owned networks have led to new jobs and tremendous savings for community anchor institutions.

Please share it with elected officials, local policymakers, friends, enemies, and those people you aren't sure you really know on Facebook. If you have some thoughts on what we missed or what should be included in Broadband 201, let us know in the comments below.

Bandwidth Caps are Unnecessary and Counterproductive

The Open Technology Institute at the New America Foundation has released a report on data caps in the U.S. The report, Capping the Nation's Broadband Future, was authored by Hibah Hussain, Danielle Kehl, Benjamin Lennett, and Patrick Lucey.

The paper looks at the growing prevalence of monthly data caps by massive ISPs like Time Warner Cable, AT&T, and others. Authors conclude that data caps are effectively discouraging Internet usage with restrictions and limits that can be expensive. From the summary:

As this paper documents, data caps, especially on wireline networks, are hardly a necessity. Rather, they are motivated by a desire to further increase revenues from existing subscribers and protect legacy services such as cable television from competing Internet services. Although traffic on U.S. broadband networks is increasing at a steady rate, the costs to provide broadband service are also declining, including the cost of Internet connectivity or IP transit as well as equipment and other operational costs. The result is that broadband is an incredibly profitable business, particularly for cable ISPs. Tiered pricing and data caps have also become a cash cow for the two largest mobile providers, Verizon and AT&T, who already were making impressive margins on their mobile data service before abandoning unlimited plans.

The increasing prevalence of data caps both on the nation’s wireline and mobile networks underscore a critical need for policymakers to implement reforms to promote competition in the broadband marketplace.  Data caps may offer an effective means for incumbents to generate more revenue from subscribers and satisfy investors, but making bandwidth an unnecessarily scarce commodity is bad for consumers and innovation.  The future is not just about streaming movies or TV shows but also access to online education or telehealth services that are just starting to take off. Capping their future may mean capping the nation’s future as well.

The paper also looks at the technical challenges of capping data usage. Additionally, the authors delve into the many ways data caps are turned into profit for a few big providers while harming users. This resource brings relevent data into focus along side long term policy implications and offers some advice:

Data Cap Myth

For the Internet to continue to serve as a catalyst for economic growth it is imperative that consumers and entrepreneurs not feel constrained online. In a recent speech, former FCC Executive Director and Chief of Staff Blair Levin highlighted the links between broadband abundance, innovation, and economic growth.

"When it comes to the wireline access network, instead of talking about upgrades, we are talking about caps and tiers. Instead of talking about investment for growth, we are talking about harvesting for dividends,” …  “[policymakers] should recognize that our progress demands an investment environment that creates the conditions that allows us to invent the future, not just harvest from the past."

An uncapped Internet environment gave rise to a host of innovative and popular applications. Broadband and bandwidth must continue to be thought of as an abundant resource, not a rationed commodity, to ensure the vibrant online ecosystem can continue to flourish.

Shortly after this report was published, the lead lobbyists for cable interests in Washington, DC, admitted that the bandwidth caps are not designed to solve any congestion problems, which Karl Bode covered with his usual smart analysis.

Except the argument that usaged pricing is about fairness has been just as repeatedly debunked. If usage caps were about "fairness," carriers would offer the nation's grandmothers a $5-$15 a month tier that accurately reflected her twice weekly, several megabyte browsing of the Weather Channel website. Instead, what we most often see are low caps and high overages layered on top of already high existing flat rate pricing, raising rates for all users.

Any argument that caps for wireline service are necessary is refuted by the fact that the fastest networks in the US, whether publicly owned, Google, or even Verizon's FiOS, see no need to cap monthly transfer amounts.

The big cable monopolists don't care about fairness, they care about boosting profits while investing as little as possible. Unfortunately, their overcharging lack of investment is harming every other industry in our country.

Susan Crawford's Captive Audience Book Reviewed

I quickly read the just-released Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age, and came away quite excited by Susan Crawford's new book.

Susan Crawford has been supportive of community owned networks and a loud voice against the poor policies that have allowed a few massive cable and telephone companies to monopolize our telecommunications. Her new book is a good resource for those just getting interested in this issue.

After the book was released last week, Susan Crawford appeared on the Diane Rehm show -- an excellent 50 minute interview that comes highly recommended. Be aware that the cable/telephone industry is engaging in character assassination to prevent Susan's message from reverberating around the country.

The book led to Sam Gustin's article in Time, "Is Broadband Internet Access a Public Utility?"

State and local laws that make it difficult — if not impossible — for new competition to emerge in broadband markets should be reformed, according to Crawford. For example, many states make it very difficult for municipalities to create public wireless networks, thanks to decades of state-level lobbying by the industry giants. In order to help local governments upgrade their communications grids, Crawford is calling for an infrastructure bank to help cities obtain affordable financing to help build high-speed fiber networks for their citizens. Finally, U.S. regulators should apply real oversight to the broadband industry to ensure that these market behemoths abide by open Internet principles and don’t price gouge consumers.

Art Brodsky also reviewed the book on the Huffington Post. He leads with a reminder of the damage done by the NFL's replacement refs, an apt comparison given how poorly the FCC and Congress have protected the public.

Susan will be our guest for the Community Broadband Bits Podcast (episode 29) on Tuesday, Jan 15, and I will be offering periodic thoughts on passages from the book in coming days/weeks.

Susan Crawford Discusses Captive Audience at Berkman Center

Susan Crawford's new book, Captive Audience: The Telecom Industry & Monopoly Power in the New Gilded Age, looks to be an excellent read for anyone regularly perusing this site. It is becoming available at bookstores near you. (For why we discourage buying from Amazon, see our Amazon Infographic.)

Susan did a one hour presentation at Harvard to celebrate the release of her new book last week. Video below. We will feature an interview with Susan on a podcast in early 2009.

Video: 
See video

AT&T, Others Overcharge Subscribers Based on Secret Bandwidth Meters

Imagine going to a gas station, putting 10 gallons into your car's 12 gallon tank, and driving off only to find your needle only approaches half a tank? This scenario is quite rare because government inspects gas stations to ensure they are not lying about how much gasoline they dispense.

But when it comes to the Internet, we have found measurements of how much data one uses is unregulated, providing no check on massive companies like AT&T and Time Warner Cable. And we are seeing the results -- AT&T is not open about what its limits are or how to tell when one has exceeded them.

Stop The Cap has noted that AT&T has advertised unlimited bandwidth for its DSL/ U-verse product while chiding and charging customers who exceeded certain amounts of monthly usage. Customers were quietly warned and charged $10 for each additional 50 GB over 150 GB for DSL subscribers or 250 GB for U-verse customers.  Clearly, "unlimited" has several definitions, depending on whether one is a customer or an ISP.

Complaints have also come in from SuddenLink customers and others. The ISP charged usage based customers for bandwidth usage when they didn't even have power. Simlarly, AT&T customers began to complain about inaccurate meters from the beginning of the program. This from a 2011 DSL Reports story - one of many comments from AT&T customers:

AT&T's data appears to be wholely corrupted. Some days, AT&T will under-report my data usage by as much as 91%. (They said I used 92 meg, my firewall says I used 1.1 Gigs.) Some days, AT&T will over-report my data usage by as much as 4700%. (They said I used 3.8 Gig, dd-wrt says I used 80 meg. And no, this day wasn't anywhere near the day they under-reported.)

Most of us don't keep track of our bandwidth usage, because there is no easy way to do it. For the most part, we have to take the word of our Internet service providers, but who is ensuring that they are accurate? Mismeasuring could be the result of incompetence or fraud, but the FCC has not stepped up to ensure consumers get what they are promised.

DSL Reports has extensively covered this AT&T bandwidth cap story and its refusal to open its meters to verification. One customer recorded a persistent pattern of inaccuracuracies, finding that AT&T was over recording the households daily usage by about 20-30%. The user contacted AT&T support to get a definition of "metered usage" because there was no definition on its website. From the article (and reposted from Slashdot):

Boy, did I get a surprise. After several calls, they finally told me they consider the methodology by which they calculate bandwidth usage to be proprietary. Yes, you read that right; it's a secret. They left me with the option to contact their executive offices via snail mail.

As long as there is no meaningful competition for broadband customers, AT&T will face no market penalty for abusing its customers. And unfortunately, the FCC has been asleep at this wheel as well. Also from Karl at DSLReports:

Worse perhaps, is that regulators in both the United States and Canada haven't shown the slightest interest in the problem despite the fact that ISPs are billing like utilities, with nobody but the consumer confirming whether their meters are accurate.

We have yet to hear of a credible reason to need bandwidth meters on wired networks. The companies that have invested in modern networks -- from community fiber to Verizon's FiOS -- see no need to count bits. It only seems to be those who don't want to invest and cable companies that want to slow the growth of over-the-top video pushing these limits.

Cable Company Ripping Off Houston

Amy Davis, Investigative Reporter for Click2 Houston.com and local channel 2, reports that Wave Vision, a Houston cable company, is not up to the task in the Lone Star State. According to Davis, the cable company may soon lose its license in Houston.

But the story won't end there because the state of Texas has preempted most local authority to protect consumers and the City's interests. Franchises like this one were grandfathered in when AT&T pushed its statewide franchising legislation that made the state responsible for enacting the franchises that allow video providers to put their cables in the rights-of-way and offer services to residents. And that law does not allow the state to refuse franchises to deadbeat corporations.

As long as a company fills out the form, the state must grant a franchise and the City has to abide by it. This leaves the City with only one option - taking the company to court. And that means more legal expenses. But when Houston wins the case, and it almost certainly will, it is not clear that they will be able to collect because the company will likely declare bankruptcy and the City will be just one of several with unpaid debts.

This is what happens when AT&T writes the legislation that takes power away from communities and puts it in the state or federal levels. State and federal government is not as responsive to citizens as local and is not equipped (nor authorized in many circumstances) to protect the public interest.

Now for the background on just how bad company is, another reminder of why communities must have the authority to build their own networks rather than being stuck with companies like this.

Customers have complained to the local Better Business Bureau 90 times and 61 of those complaints have gone unanswered, driving the BBB rating to an F for Wave Vision. (And those are just the complaints the BBB knows about!)

According to Amy Davis, however, customer complaints have not put Wave Vision in this precarious position. The company owes the City of Houston $809,789.91 in unpaid rights of way fees. Customers continue to pay those fees as part of their monthly bill, but the money is not finding its way to the city. From the article:

"They've refused to work with us, and they've essentially forced us to the step which we are now which is to take unprecedented action and recommend that their franchise be revoked," explained Chris Newport of the City of Houston Regulatory Services.

Unfortunately, revoking the grandfathered Houston franchise won't change anything as long as the company has a franchise for all of Texas.

This is not the first time Wave Vision has mistreated customers by taking advantage of their position. Cindy George from the Houston Advocate Blog reported also on limited choice and unannounced changes in pricing plans from Wave Vision. Apparently, several apartment and condo complexes in the city signed exclusivity agreements with TVMax years ago. Wave Vision has systematically reduced service and options, while increasing prices. Residents have no choice - Wave Vision carries on the monopoly in those properties.

George also reports that:

Wave Vision

In 2005, TVMax sought an injunction to stop the Greenbriar Chateau apartments from using another cable provider, but dropped the suit 3½ months later. Filings indicated that the service provider had been in an exclusive contract with the complex since 1993.

Last year, Network Supply Services filed a breach of contract suit against Wavevision for allegedly failing to pay for nearly $43,000 worth of communications equipment and services. The dispute was settled last month.

A temp agency also sued for breach of contract in 2011, accusing TVMax/Wavevision of failing to pay $108,613.96 due for temporary employees. A judge signed a default judgment in November after the cable company didn’t respond to the lawsuit.

Davis was alerted to the most recent problem when a viewer emailed her about his experience with Wave Vision:

Customer Dan Herrick e-mailed consumer expert Amy Davis to let her know he signed up with Wave Vision for $119 a month. He said his bill increased every month after that until he was paying $212 just for basic cable.

Davis called Wave Vision; but no one returned her call. The City of Houston says the company has been avoiding its calls too.

You can watch the video report here.

More Evidence for Looming Broadband Monopoly

DSLReports has accurately noted the continued decline of competition between DSL and cable providers. Heck, it seems like no large company wants to invest in the future of broadband in this country. Verizon and AT&T have chosen to focus on wireless technology, resulting in less true competition. Cable (or FTTH if you are lucky to have that option) tends to offer faster, more expensive connections and DSL is the slower, less expensive option for many.

As we noted in an earlier post, Verizon no longer offers stand alone DSL and is voluntarily losing customers to focus on their more profitable (and more expensive) fixed LTE service. Many of the companies providing DSL service simply lack the interest or capacity to invest in modern networks.

Windstream lost broadband subscribers last quarter for the first time ever losing 2,200 subscribers for a 1.36 million total. Verizon added just 2,000 net broadband users last quarter, the worst quarterly result in four years. The AP quotes Verizon as saying that the hit was due to Verizon's decision to stop selling standalone DSL.

...

Meanwhile, smaller telcos like Windstream, Frontier, Fairpoint and CenturyLink find themselves unable or unwilling to upgrade their networks to keep pace with faster cable speeds. That's going to result in considerably more bloodshed for the telcos as additional subscribers jump ship (assuming they have the choice), resulting in cable's domination of the U.S. residential broadband market.

Continued reliance on these companies to build the essential infrastructure our economy and citizens need is foolish. The incentives are all wrong for their model and the amount of public money it will take to bribe them into building better infrastructure would offer far higher returns when invested in models that are democratically accountable to the community -- networks owned by local governments, cooperatives, or other nonprofit organizations.

A Match to Watch: Tennis Channel v. Comcast

Back in 2010, we reported on the merger between Comcast and NBC, which was in the works at the time. One of the issues that came up was how programming is chosen.

At the time, the Tennis Channel had filed a suit against Comcast, alleging that Comcast did not make Tennis Channel programming available to as many subscribers as the Golf Channel and NBC Sports (both belong to Comcast). Comcast, under the Communications Act and Commission rules, is required to place channels owned by others on tiers equal to its own similar types of channels and can't play favorites.

The FCC had reviewed the case at various levels for two years (there was an appeal) and finally, in July of this year, issued a decision in favor of the Tennis Channel. The Tennis Channel alleged discrimination, Comcast argued the Tennis Channel was using the FCC to get out of a contract it wanted to escape. According to a Meg James LA Times article:

The FCC ordered Comcast to provide the Tennis Channel with distribution comparable to the two sports channels, which would effectively increase its coverage by about 18 million homes, and force Comcast to pay Tennis Channel millions of dollars more each year in programming fees.

It was the first time that a major cable operator has been found in violation of federal anti-discrimination program carriage rules that were established in 1993.

Comcast was ordered to remedy the situation within 45 days, a window that would make the Tennis Channel available in more homes during one of the biggest tennis events of the year, the U.S. Open in New York. The channel is currently available in about 34 million homes nationally.

Comcast immediately asked for a stay from the remedy, appealing to the U.S. Court of Appeals for the D.C. Circuit. Comcast was granted the stay while the case is argued on appeal. Once again, Comcast's army of lawyers  are strategically using the court as a way to slow down an adversary's remedy.

We expect to see more video legal issues arise in the near future. As broadband transforms the way people receive video signals, how those signals are governed will inevitably affect license agreements, rules, and regulations.

In an informative blog post, Susan Crawford gives us the heads up on where problems dwell and the attitudes that will drive litigation and policy. Unfortunately, now that few people watch video for free, the usual participants will tussle for a very large pie. Will the consumer be considered? Early indications don't seem to suggest that. From Crawford:

The consumer, who is being squeezed the most, would like to watch what he/she wants, when he/she wants, and doesn’t want to be stuck with enormous must-buy bundles. But no one is talking about that.

The ever-growing Comcast is a threat to those who have innovative ideas for video content. If you want people to see your content, you need to get it in a cable lineup or online... but the big cable providers are trying to wrestle back control over online video with monthly bandwidth caps.

And even when Comcast does violate the law, it knows how to string out the process long enough that the harmed party has to fold or negotiate directly with them because they'll go bankrupt waiting for justice. 

Martinsville, Virginia, Investigates Network Expansion

Not long ago, we shared information on MINET, the municipal network in Martinsville, Virginia, that serves schools, municipal facilities, and about 30 local businesses. We noted that businesses are attracted to the area and cite the capabilities of the fiber network as a driving force.

The Martinsville Bulletin now reports that city leaders have been approached by more local businesses interested in saving money by connecting through the network. The Bulletin spoke with City Manager Leon Towarnicki who said "we are essentially maxed out”  in staff and resources. Obviously, economic development through MINET is moving along well. The City Council is now considering the costs and benefits of expanding.

The city is working with CCG Consulting to develop a business plan. CCG will soon begin a business and residential survey and review of the city's current network. The survey and plan will explore the possibility of deploying a fiber-to-the-home network and communication system, but Martinsville will shy away from operating a cable television system. From the article:

Asked if the city would try to provide cable TV service again, City Attorney Eric Monday said, “We tried it. We litigated. We lost. We’re done.”

Martinsville made an attempt to acquire a retail cable television service in 2006, but found itself in a long and expensive court battle. Adelphia had previously provided cable in the area but filed for bankruptcy in 2002 and as a result, failed to honor its franchise agreement. At the time, the city landfill had just closed and the city was looking for other ways to generate revenue. They wanted to purchase the network and tried to block Time Warner Cable and Comcast from doing so. Time Warner Cable wanted to purchase the network and then engage in a like-kind exchange. This technique is a common tool large cable corporations have used to ensure geographic monopolies.

Martinsville argued that they were grandfathered in, as in the case of Bristol, and thought it could take advantage of another exception by claiming it had installed a cable television "headend" before December, 2002. Virginia law effectively revoked local authority for communities to build triple-play networks unless they built the headend prior to that date. But the court disagreed with Martinsville; the judge ruled that contracting with Adelphia to install the headend was not the same as installing it themselves. 

According to a 2006 Martinsville Bulletin article, the City Council admitted they had made mistakes in being transparent in the effort to take over the failed Adelphia franchise:

Martinsville City Council members said Tuesday they should have kept the public better informed about their attempt to buy the local cable television franchises from Adelphia.

There is "a fog amongst the public" as to how the council made decisions regarding the purchase attempt, said Councilman Mark Anderson.

"I believe we could and should have been more open," said Councilman Ron Ferrill. "Perhaps we were too protective of our negotiating situation."

The City Council is engaging in a transparent process this time and carefully exploring the economic development possibilities of MINET. From the recent article on expansion talks:

[Mayor Kim Adkins] emphasized that all of the customers approached the city about using its system; the city did not approach them.

When businesses and residents approach a local government like Martinsville and asks for options, the community should have the authority to follow through without burdensome regulations that only apply to local governments and not to private sector companies.