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The Empire Lobbies Back: How National Cable and DSL Companies Banned The Competition in North Carolina

Publication Date: 
January 3, 2013
Author(s): 
Todd O'Boyle, Common Cause
Author(s): 
Christopher Mitchell, Institute for Local Self-Reliance

In late 2006, Wilson, North Carolina, voted to build a Fiber-­‐to-­‐the-­‐Home network. Wilson’s decision came after attempts to work with Time Warner Cable and EMBARQ (now CenturyLink) to improve local connectivity failed.

Wilson’s decision and resulting network was recently examined in a case study by Todd O’Boyle of Common Cause and ILSR's Christopher Mitchell titled Carolina’s Connected Community: Wilson Gives Greenlight to Fast Internet. This new report picks up with Wilson’s legacy: an intense multiyear lobbying campaign by Time Warner Cable, AT&T, CenturyLink, and others to bar communities from building their own networks. The report examines how millions of political dollars bought restrictions in the state that will propagate private monopolies rather than serve North Carolinians.

Download the new report here: The Empire Lobbies Back: How National Cable and DSL Companies Banned The Competition in North Carolina

These companies can and do try year after year to create barriers to community-­‐owned networks. They only have to succeed once; because of their lobbying power, they have near limitless power to stop future bills that would restore local authority. Unfortunately, success means more obstacles and less economic development for residents and businesses in North Carolina and other places where broadband accessibility is tragically low.

It certainly makes sense for these big companies to want to limit local authority to build next-­‐generation networks. What remains puzzling is why any state legislature would want to limit the ability of a community to build a network to improve educational outcomes, create new jobs, and give both residents and businesses more choices for an essential service. This decision should be made by those that have to feel the consequences—for better and for worse.

This story was originally posted on the ILSR website.

Wilson's Greenlight Leads North Carolina in Fast Internet

Publication Date: 
December 5, 2012
Author(s): 
Todd O'Boyle, Common Cause
Author(s): 
Christopher Mitchell, Institute for Local Self-Reliance

Following the collapse of key industries, a town of 50,000 in eastern North Carolina had to make a hard choice. It wanted to support existing businesses and attract new ones but the cable and telephone companies were not interested in upgrading their networks for cutting edge capacity.

So Wilson decided to build its own fiber optic network, now one of the fastest in the nation, earning praise from local businesses that have a new edge over competitors in the digital economy. In response, Time Warner Cable lowered its prices and modestly boosted available Internet speeds, contributing to the $1 million saved by the community each year.

Download Carolina's Connected Community: Wilson Gives Greenlight to Fast Internet here.

The Institute for Local Self-Reliance and Common Cause have just released a case study of how and why Wilson built Greenlight, a citywide next-generation fiber-to-the-home network that set the standard for connectivity in North Carolina. The report is authored by Todd O'Boyle of Common Cause and Christopher Mitchell of the Institute for Local Self-Reliance.

The network, owned and operated by the municipal utility, offer telephone, television, and Internet services to every resident or business in the city. Over 6,000 households and businesses have subscribed, a take rate of over 30% and growing. Additionally, the network has connected all of the schools with at least 100 Mbps connections. Downtown has free Wi-Fi and the library has benefited with a higher capacity connection for people looking for jobs and taking computer classes.

The Federal Communications Commission ranks North Carolina last in the nation in percentage of households subscribing to at least a "basic broadband" service, largely because Time Warner Cable, CenturyLink, and AT&T have declined to upgrade their networks to modern standards. Only 13% subscribe to a connection that is at least 4 Mbps downstream and 1 Mbps upstream -- the minimum required to take advantage of basic Internet applications according to the FCC.

This story was originally posted on the ILSR website.

This report is the first of two. The second will be published shortly and will feature a discussion of how Time Warner Cable reacted, pushing legislation through the General Assembly to block other communities from copying Wilson's success.

Fibrant Network Gains Subscribers Despite Technical Difficulties

As we emphasize time and time again, communities build their own networks because they have to, not because they want to. North Carolina's Fibrant network in Salisbury is no exception and a recent technical headache is a reminder that no network is built without problems developing.

Fortunately, Salisbury's strong reputation for providing great, local customer service is helping as it deals with service interruptions that are the fault of the gear that runs the network. 

According to an Emily Ford article in the Salisbury Post, there have been several outages this month. While some outages are attributed to unreliable access gear, the city is still investigating to determine what other factors continue to cause problems. The network currently serves 2,160 subscribers, with 220 of them being commercial customers.

A November 9th Post article on an earlier outage, noted the problem with faulty equipment. A statement from Fibrant General Manager Mike Jury also attributed the outage to a lack of redundancy, which has since been repaired.

While Zhone has been the access gear supplier, Fibrant is now testing Calix equipment. Calix has long been a favored choice among community networks and has a very solid reputation. This is a reminder to communities of the importance of due diligence in choosing vendors -- make sure to talk to other community networks about their experiences with vendors. All equipment is subject to failure, so a key question should be how quickly different vendors respond with solutions to problems.

This technical problem comes on the heels of political problems as Salisbury has been targeted by Time Warner Cable for attacks. Readers will recall how Time Warner Cable successfully pushed the Legislature to pass H129 in 2011, a bill to neutralize publicly owned networks

Even though there have been recent outages, more people continue to take the service than to drop it. From the Ford article:

The week before the outage, 23 new subscribers signed up.

"Despite the outage, our customer base has grown," [City Manager Doug] Paris said, crediting Fibrant staff's dedication to customer service.

Jury said Fibrant's trials are to be expected, especially with a network built from scratch.

A 24-year veteran of the cable industry who took over Fibrant in March, Jury said Salisbury's network is so advanced he refers to it as "bleeding edge."

With no blueprint to follow, Fibrant is breaking new ground, he said.

 

Raleigh Plans Hobbled by State Ban on Municipal Networks

A recent article and video from Government Technology highlights the ambitious plans of Raleigh to harness the Internet to improve its attractiveness to forward-looking companies.

Unfortunately, Time Warner Cable convinced North Carolina's legislature that communities could not be trusted with the decision over whether it was a wise decision to invest in telecommunications networks.

So despite Raleigh's smart plans to build a fiber optic infrastructure that could be used to connect local businesses and spur new enterprises, it is prohibited from doing so. It can still offer services for free, which is why it can and does offer free Wi-Fi in some areas of town, but it cannot offer the services that would be most beneficial to the kind of companies that are most drawn to the Research Triangle Park area.

We look forward to a North Carolina that recognizes these decisions should be made at the local level, not by lobbyists working the state or federal capitals. But until then, we'll have to celebrate the jobs created by municipal networks in other states, where communities have the power to determine their own digital futures.

MI-Connection Embraces New Strategies, Increases Speeds for Free

MI-Connection, the North Carolina community-owned network serving Davidson, Cornelius, and Mooresville, is upgrading network speeds and unveiling a new marketing campaign. MI-Connection was formed when a few towns north of Charlotte purchased the old, dilapidated Adelphia cable network out of bankruptcy and began rehabbing it.

According to David Boraks of the DavidsonNews.net:

The company on Dec. 10 will begin selling a new top speed internet service tentatively called “Warp Speed Broadband,” though the name could change. It will offer 60 mbps downloads and 10 mbps uploads. Customers can get it for $80 to $100, depending on whether they bundle it with TV and telephone.

Existing customers also will get faster speeds Dec. 10, at no extra charge (Download speed x upload speed): 8×4 becomes 10×5, 12×4 becomes 15×5, 16×4 becomes 20×5 and 20×4 becomes 30×10.

Notice that this community network offers faster upstream speeds than most privately owned cable networks -- because they recognize the importance of empowering subscribers rather than hoping they will just consumer video and do little else.

The DavidsonNews.net article also covered MI-Connection's last quarter financial audit report. The network has faced chronic financial problems but things continue to improve. From the article:

The financial report for the quarter that ended Sept. 30 showed that the company grew revenues in all three of its businesses – cable TV, telephone and internet. Altogether, revenues were up 6.5 percent from the first quarter a year ago, to $4,114,992. Expenses fell 8.7 percent, in part because of savings on what the company pays its high-speed internet providers.

The company’s earnings from day-to-day operations continued to grow.

A new marketing plan, dubbed "Straight Talk," will appeal to local ownership and include slogans like "If you owned a grocery store, wouldn't you shop there?" "Can you create jobs just by watching TV?" and "When your boss is everyone in town, your customer service had better be good." It will be interesting to see whether or not the appeal to community spirit helps increase subscribership.

North Carolina law is especially hostile to community owned networks and MI-Connection has struggled financially, in large part due to how poorly Adelphia (a private company) had maintained essential components. Competitive attacks from Time Warner Cable have aggravated the situation. StopTheCap reported in April that, in a rare instance of private overbuilding, the cable giant has begun serving the area and appears to be making a competitive grab for MI-Connections customers.

Stop the Cap

The situation has been difficult for MI-Connection but great for all consumers in the region. From the Stop The Cap article:

Other residents in nearby Cornelius are also getting prices substantially lower than residents in cities like Charlotte, where many residents have one choice for cable: Time Warner. 

Sam, a Stop the Cap! reader in the Morrison Plantation neighborhood, noted they skipped the last few rate increases from the cable company.

“You just call and tell them the rate is too high and as soon as they find out you have MI-Connection as an alternative, they lower the price,” he said. “My niece in Charlotte can’t get the same deal even when we gave her the details — it’s only good in areas where MI-Connection operates.”

That leaves Charlotte residents paying $35-50 more a month than savvy customers further north can have for the asking.

Once again we find that competition improves affordability, even in a state with some of the toughest restrictions.

Sam, quoted in the StopTheCap article makes an astute observation about the cable company's agenda:

“It seems pretty clear to me that Time Warner isn’t hurrying to compete with Comcast or Charter — just MI-Connection and that makes me suspicious,” Sam says. “After spending all that money to ban community broadband in the state, they now seem to be trying to drive out of business the handful of companies that were exempted.”

“My niece is probably paying for this right now on her cable bill too, and once MI-Connection is out of the way, those prices will shoot right back up,” Sam concludes.

Community Fiber Networks Conference November 8-9 in Danville, Virginia

The Economic Development Conference Series' first event, Community Fiber Networks, is scheduled for November 8 - 9, 2012, in Danville, Virginia. Dates and locations for later events will follow. The series is being produced by Broadband Communities Magazine. Danville is near the border with North Carolina.

Christopher Mitchell and a long list of industry experts will be presenting on a wide range of topics at the Institute for Advanced Learning and Research in Danville.

Leaders in all areas of the Advanced Broadband Network industry will be sharing their findings and expertise. Danville was chosen because it is a true success story. By using their fiber network as a catalyst for economic development, Danville transformed itself. For years it was a struggling textile town but is now a highly desirable destination for businesses and individuals seeking advanced telecommunications services.

Christopher will be talking on Thursday, November 8th, on "Winning Community Initiatives." Friday, November 9th, he will present as part of the panel on "Innovative Financing Methods." The full agenda for the conference is available to help you plan your schedule.

Danville Location in Virginia

From the press release:

THIS IS THE FIRST conference of its kind in this country - an event devoted entirely to the relationship between a community's economic vitality and the presence of advanced broadband networks. Nations around the world have recognized this powerful linkage and responded to it - as have a growing number of communities in the United States.

Each event in this new conference series will be held in a city with an advanced broadband system.

Each event will have an impressive array of speakers whose mission will be to help attendees evaluate the options and opportunities and develop the optimal, affordable solution for their communities.

The first conference is in Danville, Virginia - the Comeback City that bounced back from devastation with a visionary broadband strategy that's creating jobs and attracting the businesses and industries of tomorrow.

Register here. Fee for the event $110. For more information contact BBC Mag at meredith@broadbandproperties.com.

Community Broadband Bits 5 - Catharine Rice of SEATOA

For our fifth episode of the Community Broadband Bits podcast, we have a discussion with Catharine Rice of SEATOA - the Southeastern Association of Telecommunications Officers and Advisors. We discuss legislation in North and South Carolina designed to stop communities from building their own networks.

Catharine Rice has been a strong advocate for local authority, helping communities respond to the CenturyLink and Time Warner Cable lobbying Juggernaut in the state capitals. After many years of successfully stopping these big companies from enacting anti-competition legislation, North Carolina passed a bill in 2011 and South Carolina in 2012.

You can read our stories that touch on South Carolina here and North Carolina here.

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 25 minutes long and can be played below on this page or subscribe via iTunes or via a different tool using this feed. Search for us in iTunes and leave a positive comment!

Listen to previous episodes here.

Thanks to Fit and the Conniptions for the music.

Wally Bowen: Open Wireless is Essential Infrastructure

Once again, we are reprinting an opinion piece by Wally Bowen, founder of the nonprofit Mountain Area Information Network based in Asheville, North Carolina. The op-ed was originally published in the Asheville Citizen-Times.

Once upon a time, Internet enthusiasts made the following comparison: the Internet is to 21st-century economies what navigable waterways and roads were to 19th and 20th-century economies.

But what if our rivers and highways were controlled by a private cartel which set tolls and dictated the make and model of our boats and vehicles? It’s unthinkable, of course. Yet over the last decade, a cartel of cable and phone companies has gained this kind of control over more than 95 percent of Internet access in the US.

In response, many communities have built municipal broadband networks. The cartel, in turn, has persuaded legislatures in 19 states, including North Carolina, to pass laws prohibiting municipal networks.

Scholars call this the “enclosure” of the Internet, similar to the enclosure of rural commons by private owners in 18th and 19th-century England. This trend includes smart phones and tablets which are locked down and controlled by licensing agreements. By contrast, the personal computer is open to innovation. You can take it apart, experiment, and create new functionality. You can also download your choice of software, including free open-source programs.

The full impact of this corporate enclosure of the Internet is still to come, but evidence of it is growing. Consider e-books. When you purchase a real book, you enjoy “first sale” ownership. You can resell it or use it as a doorstop. You can do anything with it, except reproduce it. But when you purchase an e-book, your options are limited by a license that can be changed any time by the vendor without your consent.

With an enclosed Internet, we become renters rather than owners. Our freedom to experiment and innovate, while not totally lost, is governed by gatekeepers and licensing regimes.

But there is a way around the Internet gatekeepers: “open wireless” networks using unlicensed spectrum.

Most spectrum used for smartphones is licensed to, and controlled by, the telecom cartel. By contrast, the free Wi-Fi we enjoy in coffeehouses is unlicensed and free for anyone to use and experiment with. But this spectrum has a very limited range. In 2008, therefore, the FCC approved the “TV white spaces” (TVWS) for unlicensed use. Often called “Wi-Fi on steroids,” this superior spectrum has a far greater range and capacity than conventional Wi-Fi.

Last December the FCC approved the first TVWS device. This new technology can provide seamless coverage throughout a city like Asheville, thereby creating a viable alternative to the cable/phone company cartel. Here’s a sampling of what’s possible via “open wireless” technology:

* “Buy local” advocates use open-wireless to run mobile payment systems that keep money in the local economy and reduce the burden of credit card fees on local merchants.

* “Green energy” advocates use open wireless to transform the corporate “smart-grid” to a “micro-grid” that empowers local innovators and entrepreneurs to promote conservation and new sources of energy.

* A hospital in Ohio is field-testing a TVWS network for its emergency room. When EMS vehicles are in range, patient information and vital signs are automatically transmitted ahead to the ER staff.

These creative and local uses of the Internet were possible because of open-wireless technologies. No one had to ask permission of a network owner or pay rent to a license-holder.

For “Smart Cities” and local self-reliance advocates, open-wireless networks are essential community infrastructure. “Community wireless protects our freedom to innovate and problem-solve in ways that keep money and jobs in the local economy,” says Christopher Mitchell, director of the Telecommunications as Commons Initiative for the Institute for Local Self-Reliance.

Since 2003, the nonprofit Mountain Area Information Network (MAIN) has operated an open-wireless network, but its reach and capacity have been limited. With the imminent arrival of the TV “white spaces” technology, MAIN is launching a $50,000 capital campaign to convert its wireless network to TVWS. This new technology is estimated to have a range of 15-20 miles with speeds of 10-15 megabits per second.

As the telecom cartel tightens its grip on the Internet, MAIN and its partners envision Internet access for Asheville and WNC that protects civil liberties and preserves the freedom to innovate for local inventors and entrepreneurs. To learn more or to get involved, visit: http://www.main.nc.us/TVWS.

Wally Bowen is founder and executive director of MAIN. In 2010, he was diagnosed with ALS. He will be stepping down as executive director later this year, but will continue working on community broadband policy and advocacy.

Newton, North Carolina Is One Big Hotspot

North Carolina infamously became the 19th state to enact barriers to community broadband, but we wrote about a loophole to it last year - communities can provide services for free without interference from the state capital. And starting last year, Newton, with 12,968 residents, began offering free Wi-Fi among 48 blocks and has plans to expand.

The city leaders were looking for ways to revitalize downtown. Jason Clay, the City IS Director, wanted to provide free outdoor WiFi as a way to get residents out and into the heart of the city.  He had explored the possibility in the past, but the high cost was always a barrier. Initial estimates were between $50,000 and $150,000 to install free Wifi.

Clay put in time researching  the products that would work for their situation. Rather than pay a consultant to do radio frequency and engineering studies, he did the work himself. By shopping directly with Meraki and Ubiquiti, Clay found significant savings. He even enlisted the help of the city's electrical crew and Information Services staff to install the needed devices. Where did they put the equipment? On city poles and water towers. Free WiFi in Newton is truly an initiative fueled by ingenuity, determiniation, and some elbow grease. From Joe DePriest's Charlotte Observer article written when the network went live:

"I knew the equipment was out there and that we had to find out which one fit our needs," Clay said. "So I kept digging and researching, trying to take the mystery out of it. When you take the mystery out of anything, it's usually just a lot of smoke and mirrors anyway. I kept at it. And we came up [with] some pretty cool stuff."

In a September city press release:

“Currently the City has surplus Internet bandwidth so it just makes sense to share it with the citizens,” he [Clay] said. “We do have bandwidth limitations set so the free Wi-Fi cannot interfere with City data traffic.”

In addition to visitors to the city's downtown area, the network is used by city employees to monitor the electric grid and water supply and for public safety purposes. The City plans to expand the use of the network to real time public safety purposes and for employees that are in the field, including GIS, street division work, and public works purposes. Also in the press release:

“The City found it too costly to provide cellular data cards to all of the city’s mobile workers,” Clay related. “By owning the wireless network, the City will have the flexibility of expanding the system, controlling the security, and managing the capacity. Plus, the area’s 3G coverage is spotty and 4G isn’t even here.”

The goal, according to Clay, is to expand the wireless network to all areas in the city limits. Currently, areas served are in the downtown business district, at the City pool, at Jacob Fork Park, and inside City Hall.

Downtown businesses see the value in offering free WiFi. In addition to using the network for commercial purposes, business leaders consider it a boost to the atmosphere and the local economy. In the Observer article:

Mayor Pro Tem Anne Stedman, 54, who runs the Trott House Inn Bed & Breakfast on North Main Avenue, sees the free access as one tool to boost the heart of the town she grew up in. At 13, she delivered The Hickory Daily Record in a thriving downtown, stopping for ice cream or a cherry Coke at H&W Drug. Free wireless alone won't restore the town to its old glory, but Stedman thinks it's a step in the right direction. "Newton has never lost its charm," she said. "This is a way to help put the spirit back."

Big Bucks: Why North Carolina Outlawed Community Networks

Less than a year after North Carolina became the 19th state to create barriers to community networks, effectively outlawing them, the non-partisan organization Follow the Money has crunched the numbers and found that private telecommunications interests donated quite heavily to lawmakers that pushed their bill through the Legislature:

According to a report by the National Institute on Money in State Politics, Dialing Up the Dollars: Telecommunication Interests Donated Heavily to NC Lawmakers, Republican lawmakers and those who held key leadership positions, sponsored the bill, and/or who voted in favor of the bill received considerably more campaign contributions from the telecommunication donors than did their colleagues. For example, lawmakers who voted in favor of HB 129 received on average 76 percent more than the average received by those who voted against the bill. The four primary sponsors of the bill received an average of $9,438 each, more than double the $3,658 given on average to lawmakers who did not sponsor the bill.

Recall that Time Warner Cable pushed this bill for years with some help from AT&T, CenturyLink, and others that stood to benefit by limiting broadband competition. But the Legislature wisely refused to enact it... until 2011.

Now we have a better sense of what may have shifted the balance. Consider this:

Thom Tillis

Thom Tillis, who became speaker of the house in 2011, received $37,000 in 2010–2011 (despite running unopposed in 2010), which is more than any other lawmaker and significantly more than the $4,250 he received 2006–2008 combined. AT&T, Time Warner Cable, and Verizon each gave Tillis $1,000 in early-mid January, just before he was sworn in as speaker on January 26. Tillis voted for the bill, and was in a key position to ensure it moved along the legislative pipeline.

Running unopposed for office, he collected more money from the cable and phone companies than any other Representative and almost 10 times as much as in the previous two cycle combined. As Speaker, he set the agenda and decided priorities. At a time when communities need as many broadband options as possible, he pushed a bill to limit competition.

It does not prove corruption, but in the immortal lyrics of C&C Music Factory, it "makes you go, hmmmm."

Senator Apodaca, one of the lead supporters of the bill in the Senate, received $21,000 from telecom political action committiees. Only one other Senator came close to that total -- Senate President Pro Tempore Phil Berger. Most Senators collected well under $10,000.

How did others in leadership positions do?

Senate President Pro Tempore Phil Berger received $19,500, also a bump from the $13,500 he received in 2008 and the $15,250 in 2006. He voted for the bill.

Senate Majority Leader Harry Brown received $9,000, significantly more than the $2,750 he received in 2006 and 2008 combined. Brown voted in favor of the bill.

Democratic Leader Martin Nesbitt, who voted for the bill, received $8,250 from telecommunication donors; Nesbitt had received no contributions from telecommunication donors in earlier elections.

Oppose HB 129

None of this data suggests quid pro quo corruption. We are not saying that these people only supported this bill because they got thousands upon thousands of dollars from those who wanted it passed.

Nonetheless, the Legislature decided to prioritize a bill to revoke local decision-making authority from communities to make them more dependent on a small number of cable and DSL companies that just happened to give tens of thousands of dollars to key lawmakers.

Hmmmmm.

No use crying about it now. The question is where we go from here. Time to hold their feet to the fire -- after the bill passed, CenturyLink claimed "Thanks to the passage of House Bill 129, CenturyLink has gained added confidence to invest in North Carolina and grow our business in the state."

Can anyone attest to CenturyLink increasing investment in North Carolina? Almost certainly not. AT&T has admitted it won't continue the U-Verse rollout it once promised state legislators.

Let's collect the stories of people denied fast, affordable, and reliable access to the Internet due to laws limiting local authority. Always feel free to share such stories with us.