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Jim Baller Discusses Municipal Broadband History - Community Broadband Bits Episode #57

Jim Baller has been helping local governments to build community owned networks for as long as they have been building them. He is the President of and Senior Principal of the Baller Herbst Law Group in Washington, DC. Jim joins us for Episode #57 of the Community Broadband Bits[/glossary] podcast to discuss some of the history of community owned networks.

Jim has a wealth of experience and helped in many of the most notable legal battles, including Bristol Virginia Utilities and Lafayette.

We start by noting some of the motivations of municipal electric utilities and how they were originally formed starting in the late 19th century. But we spend the bulk of our time in this show focusing on legal fights in the 90's and early 2000's over whether states could preempt local authority to build networks.

In our next interview with Jim, we'll pick up where we left off. If you have any specific thoughts or questions we should cover when we come back to this historical topic, leave them in the comments below or email us.

You can learn more about Jim Baller on his website at Baller.com.

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 subscribe via iTunes or via the tool of your choice using this feed. Search for us in iTunes and leave a positive comment!

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

Thanks to Break the Bans for the music, licensed using Creative Commons.

TV Everywhere in Tullahoma, Tennessee

Tullahoma's network, LighTUBe, continues to bring new services to residents and business customers, including smart metering and gig service. LighTUBe has increased Internet speeds without raising rates five times since 2008. Now, LighTUBe offers 'TV Everywhere' to subscribers.

The Tullahoma New reports:

TV Everywhere allows customers to watch content on mobile devices such as iPads and smartphones, according to communications specialist Chelsea Adams.

“What’s even better is that there is no additional cost to LightTUBe customers for using this service,” she said.

To sign up for the TV Everywhere option, LightTUBe customers should log into the TV Everywhere website at www.watchtveverywhere.com, register as a user with information provided on their monthly LightTUBe statement, and an activation link will be emailed to them.

Additionally, LightTUBe customers can register up to four user accounts to use with their TV Everywhere accounts, according to Adams.

You can listen to the story behind LighTUBe in Episode #54 of the Community Broadband Bits podcast. Chris interviewed Brian Skelton, General Manager of the Tullahoma Utilities Board, about the network and the benefits it brings to the community.

Consultant Argues Never Used Financing Mechanism Also Won't Work in Palo Alto

I was troubled to see Broadband Communities publish an odd and misleading story about Palo Alto in the May-June issue [pdf]. Authored by Stephen Blum of Tellus Venture Associates, a consultant that has been hired by Palo Alto in the past, it showed a remarkable level of ignorance about community owned fiber networks and broadband more generally.

The title alone, "Can FTTP Work in Palo Alto?" is just odd. Why exactly would FTTP not work in Palo Alto? It works in hundreds of other cities and towns, most of whom are less well positioned than Palo Alto for such a venture. A more honest title would have been "Consultant Argues Never Used Financing Mechanism Also Won't Work in Palo Alto." Blum made a very good case for that narrow argument but fails to lay out any convincing evidence that a variety of other models are doomed.

Parts of the article can only be called cable and DSL boosterism - such as repeating the talking point that AT&T's U-Verse and Comcast already offer "high levels of service at competitive rates." Competitive to what? Neither can deliver the speeds offered by modern fiber networks and are only "competitive" if one ignores the much slower upstream speeds, higher prices, lesser reliability, problems of oversubscription, and poor customer service one gets from those providers.

Reminds me of "Slick Sam" from Lafayette and the "functional equivalence" between DSL and FTTH.

Blum apparently knows better - that Palo Alto residents are "happy" with the existing services because they have not spontaneously marched down El Camino Real demanding faster speeds at lower prices. This is the wrong measure - reminiscent of the now oft-quoted Henry Ford line that if he asked people what they wanted, they would have said "faster horses."

The number of specific errors in this piece are many, and have been well documented by those familiar with the history of Palo Alto's studies. I want to focus on just a few. Let's start here:

Overall, 79 percent of households would have to pay $3,000 apiece to fully fund FTTP construction costs.

YIKES! Cue the foreboding music! Palo Alto has something like 25,000 households. If 20,000 of them paid $3,000 then the City would have $60 million in addition to its present $14 million dark fiber reserve - a staggering $74 million of theoretical money that has nothing to do with anything. I know of no network that has been built in this manner.

This is an absurd measure for whether a network is feasible. Networks are not financed in this way, partially because, as the author adroitly notes, it doesn't appear likely to work. Community owned networks are financed using a few common methods, most often revenue bonds issued by the utility. Palo Alto's past studies of this approach reflected a desire to avoid that path and the results of those studies in no way determine whether a city owned FTTH network is feasible in 2013 given the present assets and environment.

The user-financed model remains a peculiarity and quite possibly will have a role to play in the future (though almost certainly not to finance the entirety of a system). Palo Alto would be crazy to hinge its decision of whether to invest solely on the feasibility of each home owner paying its full connection cost up front.

Palo Alto Logo

In examining the likelihood of success for Palo Alto, it makes sense to consider similar communities that have made the investment:

Although there were some apparent FTTP successes (for example Bristol, Va., and Cedar Falls, Iowa), cities that had more in common with Palo Alto, such as Alameda and Provo, Utah, were failing.

There is nothing "apparently" successful about Cedar Falls or Bristol. They are unambiguously stunning successes, with take rates north of 70 percent and have led to thousands of jobs. And both can deliver a gigabit anywhere in town at a moments notice at rates a fraction of what major carriers charge. But he believes Alameda (with an older HFC cable system) and Provo (having to deal with strict state laws not present in California) are more relevant comparisons. There are some 140 other citywide networks that might be more relevant, but Blum ignores them.

google-gig.png

He ultimately concludes that Google's experience in Provo will somehow inform local government decisions around network investments. This is some of the worst advice I have read. First of all, Google's costs are different than any other firm, let alone a local government because it already runs one of the largest fiber networks on the planet (possibly the largest). The most brilliant engineers on the planet work for Google. It doesn't publish its costs and is a private sector firm with far different motivations and incentives than a local government.

In short, there might not be a worse comparison than Google for a local government evaluating its own plan for meeting long term telecommunications needs.

All of this being said, Palo Alto could rationally choose not to invest in a FTTH network. It would have to compete against Comcast and AT&T, who engage in predatory tactics while federal regulators ignore potential Sherman Anti-Trust violations.

Given the many wonderful aspects of the community, particularly for people who don't like winter, maybe DSL and Comcast cable will be good enough for the heart of Silicon Valley. That is their choice, not mine (my wife and I love Minnesota winter). I just hate to see such an imbalanced and inaccurate case made suggesting it could not work.

Knoxville Downtown Wondering 'Where Is All the Broadband?'

Knoxville Metro Pulse reporter Paige Hunton published a story last month about a common complaint from downtown residents and businesses - "Downtown Knoxville's Internet Access Kinda Sucks. Can It Be Fixed?" The problem worked its way from local talk to twitter and city leaders have met with residents and business owners to publicly discuss options.

This is a perfect example of what happens to a community that refuses to take responsibility for ensuring local businesses and residents have access to the essential infrastructure they need. Knoxville's approach to improving its Internet access is akin to crossing one's fingers and hoping really hard for the best.

Hunton' describes modern day disaster in the downtown area comprised of an inconsistent patchwork of AT&T DSL, Comcast, and a very limited amount of private provider fiber optics. Some areas have no access, others have no choices. While the city tries to encourage downtown commerce with tax credits for developers and a new entrepreneur center critical high-speed connections are missing.

City officials say the downtown area has a limited amount of aging conduit, discouraging private providers and cost prohibitive to expand. Likewise, old buildings with substandard internal wiring discourage investment from private companies.

Hunton tells the story of Ian Blackburn, a former colleague that now works for a downtown employer impacted by the lack of high-speed broadband downtown. After outgrowing its T1, the company went with 6 Mbps through AT&T DSL. AC Entertainment soon outgrew DSL:

"On one occasion in our DSL days, we had to download a video spot from an artist management site, make a few edits, burn it to disc, and get it to FedEx that day. The browser was estimating over an hour remaining for the download, which would miss the FedEx cutoff point. I remotely logged into a server in my living room, started the download, jumped on my bike, pedaled home, burned the file to a DVD, and was back in the office inside of 20 minutes,” he says. “The problem got solved, but that’s a ridiculous way for a company to have to operate. You can’t do business if you can outrun your Internet on a bicycle.”

AC Entertainment Logo

The building that houses AC Entertainment is now served by Windstream via AT&T fiber optic cables, but many other businesses must contend with pokey DSL as the best option. City and business leaders are considering wireless for the short term:

“It’s not a perfect solution. You always want physical wiring wherever you can get it. But if you can’t get it, wireless Internet is a great option,” Blackburn says. “[Knoxville doesn’t] need fiber-to-the-door like Chattanooga has. A WISP [Wireless Internet Service Provider] will do, and it’s something we can do now while we’re looking to the future for more substantial infrastructure improvements.”

Hunton also talked with Eric Ogle, a researcher at the University of Tennessee's Hoawrd J. Baker Jr. Center for Public Policy. Ogle studies Internet access and community development. Ogle did not rave about Knoxville's tepid approach to ensuring broadband downtown:

“Additional broadband options in Knoxville at a lower cost would force Comcast and others to lower their costs to become more competitive. We see it all the time, when an incumbent provider enjoys a local monopoly and they suddenly get new competition, their pricing drops,” Ogle says. “So it would be no surprise if Knoxville started talking seriously about deploying a city-wide network, companies like AT&T and Comcast would increase their efforts here.”

For the time being, though, [Knoxville’s Chief Policy Officer Bill] Lyons and [Knoxville Downtown Coordinator Rick] Emmett do not sound keen on serious city involvement in the private broadband market.

“I don’t think we missed any economic activities,” Emmett says, compared to Chattanooga’s network build-out. “That’s the point of this [strategy] is trying to draw in some business.”

That attitude, Ogle says, could be a major mistake in the future.

“I’m a believer that the best way to undermine investment in the future is to fail to provide the needed infrastructure of today,” he says.

Knoxville officials don't think they missed any economic activities? Perhaps they should visit the WBIR archives for examples of companies that deliberately chose to expand in Chattanooga rather than Knoxville specifically because of Internet access. Knoxville may not want to build its own network due to the dirty tricks commonly employed by carriers like Comcast and AT&T, but they had better come up with some sort of a plan.

Wireless Internet Access Fact Sheet

Wireless networks have been incredibly successful, from home Wi-Fi networks to the billions of mobile devices in use across the planet. So successful, in fact, that some have come to believe we no longer need wires.

We developed this fact sheet to clarify some misconceptions about what wireless Internet networks are capable of and the importance of fiber optic cables in building better wireless networks as our bandwidth needs continue to increase.

This fact sheet defines important terms, offers some key points clarifying common misconceptions, compares 4G and 3G wireless to wired cable, and more. We also include references to additional resources for those who want to dig deeper.

Download our Wireless Internet 101 Fact Sheet Here [pdf].

If you want updates about stories relating to community Internet networks, we send out one email each week with recent stories we covered here at MuniNetworks.org. Sign up here.

Cox Discourages Internet Use That Competes with Core Cable Product

Another story of frustration as cable companies try to discourage Internet use on their last generation networks.

An article earlier this month in StopTheCap! tells the story of the John Heeley family, long time Cox customers and avid Netflix fans. The Heeley's received a letter from Cox warning them about their "excessive Internet usage." They were more than a little annoyed, considering they fork over $2,400 a year to the cable giant provider so called to express their displeasure:

Heeley’s fiancé Shelley was angry after realizing just how much the couple already spends with Cox.

“I called them on the phone and the first thing they want to do is get you to upgrade and spend even more money with them,” she tells Stop the Cap! “They tried to vaguely threaten our service if we continued to ‘overuse the Internet’ and suggested we cut back or cancel Netflix which they think is the reason we went over the limit.”

Shelley says she was born at night, but not last night.

“How convenient they want you to stop using Netflix, Amazon, or other online video services that their cable TV competes with,” Shelley says. “It is unfair competition.”

Shelley requested a Cox supervisor and threatened the company right back, telling Cox if they sent one more letter like that, the Heeley family would take their business elsewhere.

“He told us quietly we could ignore the letter and any future letters and they will add a note on our account,” Shelley tells us. “He confided they have customers going over the limit all the time and the letter is really about educating customers about usage.”

Ketchum, Idaho: No Tolerance for Cox Push Polls

Cox pushed Ketchum one step too far. The community of 2,700 formed a broadband advisory committee in November, 2012, and included a representative from Cox on the committee. Brennan Rego of the Idaho Mountain Express recently reported on happenings in Ketchum.

When residents in Wood River Valley started receiving push poll telephone calls from Cox to poison any possibility of a community owned network, Mayor Randy Hall and city leaders reacted promptly. They booted Cox off the broadband advisory committee.

Consistent with Cox push polls in other places, questions were leading:

 “The questions were so outrageous, I didn’t want to continue with the survey,” [Valley resident Sarah Michael] said. “I got offended. They were inappropriate and misleading.”
 

Michael said that, in essence, one question asked: Would you support Ketchum’s broadband initiative if you knew the city would cut police, fire and other essential services to pay for it?
    

“Who’s going to answer yes to that?” she said.

Michael and other residents who received the calls contacted surprised city staff and Mayor Hall. 

 “As the mayor, I can’t stand by and let somebody imply that I’m going to compromise the Police Department and the Fire Department by taking money away from them and putting it toward a broadband initiative,” Hall said. “That’s insane. I would never do that. I think the survey was trying to create fear.”

Cox claimed the questions were designed to "learn more about the public's opinion" but would not divulge the wording of the survey questions.

The city posted a disclaimer on its website to ensure residents knew the survey was not associated with the committee. 

“Cox is a very valuable member of our community,” Hall said. “But to imply that the city is willing to compromise the health and safety of its citizens by funding a broadband initiative is false and irresponsible.”
    

Hall said he considers Cox’s “unilateral action” in deciding to conduct the survey a “breach of trust,” but that the city would welcome a new representative of the company to the committee.

This behavior from Cox should be unacceptable in any community. Unfortunately, such polls are a common tactic from Cox, which we wrote about in our case study of Lafayette. In that situation, someone recorded the poll phone call, a very smart move that allowed everyone to hear how Cox had worded the questions to turn the community against the project with lies.

Even After Omaha, Communities Cannot Count on CenturyLink For Connectivity

CenturyLink is a massive telephone company struggling to remain relevant as we transition to mobile phones and require connections much faster than DSL delivers. Though the Omaha gigabit announcement may seem to be a monumental shift for this company, it actually is not. It is a blip on the radar - an important blip but a blip nonetheless.

The Omaha pilot does not represent a sudden change of CenturyLink strategy or capacity. Part of West Omaha has a unique history that prompted this investment. The vast majority of communities in CenturyLink territory still have no hope for upgrades beyond the basic DSL they offer today. Sadly, this already-outdated technology will only fall further behind in coming years.

First, if you missed it, CenturyLink has announced a 1 Gbps pilot project in Omaha, Nebraska. This is considerably more newsworthy that AT&T's toothless fiber-to-the-press-release response to Austin's Google Fiber.

CenturyLink is a massive corporation in a tough spot. It operates in 38 states and in each one, subscribers are fleeing slow DSL for faster networks and moving from landlines to wireless devices. CenturyLink does not have enough revenue for the upgrades most communities need.

CenturyLink deserves some praise for this gigabit trial because it recognizes the need to upgrade old networks to offer faster, more reliable connections. And it is symmetrical, offering the same upload speeds as downstream whereas the Verizon FiOS network tends to prioritize downstream at the expense of up.

For years, CenturyLink has told communities that basic DSL is just fine. We'll probably still hear that talking point in many communities from CenturyLink's government affairs staff. But this project is an admission that America needs better networks.

Why Omaha?

Qwest Choice Service

The only source we saw reporting on the special circumstances of how Omaha was chosen for this project was Telecompetitor with "CenturyLink enters the gigabit era:"

CenturyLink spokesperson Stephanie Meisse tells Telecompetitor the 48,000 customers who will be eligible for the gigabit network were previously served by pre-DOCSIS hybrid fiber coax that needed upgrading. CenturyLink is upgrading that network to Gigabit Passive Optical Network (GPON) technology to facilitate up to 1 Gig speeds. The gigabit deployment will not cover all of CenturyLink’s Omaha footprint — it will only be available, for now at least, to west Omaha, where the legacy hybrid-fiber coax network was deployed.

Before Qwest was taken over by CenturyLink, it had created a pilot project in this area called Qwest Choice TV and OnLine where it offered triple play services -- adding cable television to its DSL and telephone suite. This approach only got as far as Phoenix, Denver, and Omaha in the old Qwest areas.

To be clear, the Omaha trial is pretty limited. 48,000 households is substantial, but only represents 12% of the metro. And a specific demographic slice according to Phil Dampier at Stop the Cap:

Only around 12% of metropolitan Omaha will have access to the experimental fiber service, primarily those living in West Omaha. The network will bypass residents that live further east. The boundaries of the forthcoming fiber network are notable: West Omaha comprises mostly affluent middle and upper class professionals and is one of the wealthiest areas in the metropolitan region. Winning a right to offer service on a limited basis within Omaha is an important consideration for telecom companies like CenturyLink.

The gigabit price is pretty reasonable, in the way that only a few massive operators can make it: $80/month when bundled and $150/month for standalone.

Nebraska Seal

One unanswered question in all of this is whether the gigabit service comes with data caps, as noted by Karl Bode at Broadband Reports:

The company confirmed to me last March that they impose a 150 GB for 1.5 Mbps service plans, and a 300 GB cap for anything faster. The company also boots excessive users off of their network.

Any expectation that CenturyLink will make more investments of this nature soon are mistaken. They even candidly admit that they will have to evaluate this pilot project before considering expansion. That evaluation would happen in 2014, at the earliest. If they were to expand it, it will take another few years before they get going. In the meantime, the vast majority of CenturyLink customers will be stuck on DSL.

Let's take a look at CenturyLink's capital investment strategy. This is where we get a better sense of the companies true priorities. Thanks to Seeking Alpha, we can read the transcript of the Q4 2012 Earnings Call from mid February.

The call reveals that CenturyLink has placed a major emphasis on getting fiber to wireless towers (a cash cow) and connecting large enterprise customers with cloud services. Neither of these approaches do anything to improve residential or small business Internet access in communties. But they are a very sensible place for a firm to maximize its revenues.

Stewart Ewing, CFO, stated:

Capital expenditures are expected to range from $2.8 billion to $3 billion driven by spending in our key growth areas, data hosting will spend $325 million to $375 million, HSI [High Speed Internet] expansion and HSI capacity will spend between $350 million and $375 million, and our Fiber-to-the-tower will continue to spend about $250 million to $300 million in this area, our Prism TV with the launch of the Phoenix and one other market, we expect to spend $100 million to $150 million.

CenturyLink Map

Of the 38 states it serves, CenturyLink has announced two metro areas that are getting substantial upgrades in 2013. The first is Phoenix with a VDSL product like AT&T's U-Verse. This is faster than standard DSL but barely competitive with cable's DOCSIS 3 standard. And households even within the city get wildly different speed due to the way distance degrades the VDSL signal.

Omaha is the second -- where 12% of the metro will be upgraded to a next-generation network. If I had to put money on the next metro to get meaningful investment, it would have to be Denver because it is the third (and final) former Qwest territory community getting the television product.

CenturyLink is putting $350 million into expanding high speed Internet generally, but separately (from what we can tell) it is spending between $100-$150 million on improve Internet access in just two markets. Of those two, only 12% of Omaha is covered and the VDSL in Phoenix is barely competitive with existing cable. That should give you a sense of the scale of CenturyLink's investment dilemma: High costs and limited dollars.

Put another way, Chattanooga's EPB spent approximately $300 million over three years to deliver FTTH to 170,000 households across its 600 square mile territory. Yet another way: If CenturyLink dumped its entire 2013 capital expenditure budget into FTTH for Minneapolis and Saint Paul, it would be insufficient to bring FTTH to everyone. CenturyLink operates in 38 states.

CenturyLink just doesn't have the money to upgrade most of its communities. Will it in future years? That is a question that Phil Cusick of JPMorgan asked: "Okay. And, so we should look at CapEx as being essentially flat for the next few years?"

CFO Stewart Ewing response:

That's our thinking now. Pretty flat, we could bring it down some, cut it off a little bit depending on. It's really based on the success of these new initiatives, I mean, what we think we can drive in terms of revenue and margins going forward.

CenturyLink is not dumb or evil, it just has different priorities for investment than what communities need. The sooner local governments understand this, the better. Heck, CenturyLink itself has made this point in Minnesota:

CenturyLink Minneapolis Building

We’re a public company. We have shareholders. We have rules and commitments. If you’re smaller, the shareholders are the owners. There’s more flexibility – especially if owners/shareholders are local.

Minnesota Public Radio summed it up:

Noting that CenturyLink wants every customer it can find, Ring pointed out that the company nonetheless needs a return on investment that satisfies shareholders and meets the demands of larger commitments and fiduciary responsibilities.

The lesson is clear. Omaha is a outlier, don't count on CenturyLink to invest in better connections for your community.

And finally, I could not resist but note Julius Genachowski's final hurrah: One of the last acts of former Chairman Genachowski was to rush out a press release praising this limited pilot, though the former Chairman has ignored much more impressive citywide announcements of gigabit availability in other communities including Wilson, North Carolina; Clarksville, Tennessee; Tullahoma, Tennessee; and even a small company doing an apartment complext in Albuquerque, New Mexico: CityLink Fiber.

The federal government remains clueless in this regard, blinding by the lobbying glitz of powerful industries. The big cable and telephone companies will not solve our Internet connectivity problems. Communities are wise to depend on themselves.

The First Honest Cable Company

This video is really making the rounds - I have seen it on multiple lists and many have forwarded it to me. I found it hilarous, but be warned that it features salty language that may be offensive to some and is probably NSFW.

Video: 
See video

Moultrie City Manager Discusses Origins of CNS Network in Georgia for Community Broadband Bits Episode 39

Mike Scott, City Manager of Moultrie in Georgia, joins us for Episode #39 of the Community Broadband Bits podcast to share the origins of the Community Network Services (CNS) network that joins four towns in four counties in rural southwest Georgia.

In this interview, Mike Scott shares some of the benefits of the network for local schools and community savings. Built originally because the existing cable and telephone companies would not invest in their communities, CNS has proved itself an incredibly valuable community investment.

CNS is credited with creating over 6,000 jobs in the communities it serves, a tremendous boon for the communities that joined together to create this network. During our interview (below), we note a video they created to show off some of the benefits of this network. Here it is:

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 20 minutes long and can be played below on this page or subscribe via iTunes or via the tool of your choice using this feed. Search for us in iTunes and leave a positive comment!

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

Thanks to D. Charles Speer & the Helix for the music, licensed using Creative Commons.