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Community Broadband Media Roundup - April 17

This week, Christopher traveled to Austin, Texas for the Broadband Communities Conference. It was great to connect with so many people doing great work and build on the energy we are seeing across the country. Onward!

FCC Chairman Tom Wheeler Pokes Finger in Eye of Telecom Incumbents at Broadband Communities in Austin by Drew Clark, BroadbandBreakfast.com

Wheeler Talks Up Pre-emption Says There Are Serious Questions About ISP Competition by John Eggerton, MultiChannel

Just to reiterate: 

"The Commission respects the important role of state governments in our federal system," he said, "and we do not take the matter of preempting state laws lightly. But it is a well-established principle that state laws that inhibit the exercise of federal policy may be subject to preemption in appropriate circumstances. My position on this matter was shaped by a few irrefutable broadband truths:

  • You can't say you're for broadband - but endorse limits on who can offer it,
  • You can't follow Congress' explicit instruction to 'remove barriers' to infrastructure investment - but endorse barriers to infrastructure investment,
  • And you can't say you're for competition - but deny local elected officials the right to offer competitive choices."

National broadband summit aims to 'Gigafy America' WRAL TechWire

Municipal Broadband: Signs of Desperation? by Bernie Arnason, Telecompetitor

One response to this question regarding the need for municipals to enter the broadband business grabbed my attention – desperation. It was voiced by Deborah Acosta, the chief innovation officer for the city of San Leandro, California during the panel discussion “Using Broadband to Drive Economic Development: Successful Local Approaches.”

 

Community Broadband Networks News: State-by-State

California

Digital Divide: 100,000 lack Internet access in SF, report says by Joshua Sabatini, San Francisco Examiner

100,000 San Franciscans Don't Have Internet? by Jay Barmann, SFist

Massachusetts

Letter: Key moment for broadband by Steve Nelson, Berkshire Eagle

The regional fiber network is our best tool for economic development. For keeping young people here after they graduate from our fine colleges and universities. For attracting families with young children, who will get a better education because increasingly kids will have to do more homework online.

...

The choice we face in our moment of truth this spring is simple. Each of us must decide for ourselves, our families and our towns: to move ahead or fall behind.

Washington

Group fighting for Seattle broadband to become a public utility by Kipp Robertson, MyNorthwest.com 

Citizens took to social media when Comcast service went down for more than 30,000 customers. Follow the hashtag: #ComcastOutage for the stream.

"If Internet were a public utility in Seattle, everyone would have access," Roach said. "There's just no limit to the things that could shift in our city if we had that access."

Making Internet a public utility could allow for better reliability, Roach said. The impact of construction crews accidentally cutting a fiber-optic line in South Lake Union, for example, might have less impact if there are more safeguards.

Restless crowd wants Tacoma to keep control of Click network by Kate Martin, News Tribune

People are passionate about connectivity, and believe that there are may benefits beyond the bottom line. It's important that elected officials realize this before they make long-term deals that will impact their constituents. 

 

Oh, ALEC...

Phone Company Refuses to Stop Denouncing ALEC’s Telecom Policy Credo Mobile said it will not comply with the conservative group's cease-and-desist demands by Dustin Volz, National Journal

Anti-municipal broadband group tries to silence a critic ALEC sent cease-and-desist to wireless carrier, which refuses to comply by Jon Brodkin, Ars Technica

ALEC Threatens To Sue Critics That Point Out It Helps Keep Broadband Uncompetitive from the sloppy-denial dept by Karl Bode, TechDirt

Click! Network Rates Set to Increase to Cover Retrans Fees

Tacoma's Click! network raised prices in 2010 in order to cover increases in retransmission fees for its television feeds. Fees have continually risen for Click! and other networks and, according to Tacoma's News Tribune, will continue to rise. The market is fundamentally broken, with small providers struggling to keep up as sports programming shoots through the roof and companies like Comcast merge with content owners.

In Tacoma, the situation was so bad it led to a fee dispute between KOMO and Click! network that resulted in a channel blackout on the network. The News Tribune pursued document requests early in 2014 to obtain copies of the retransmission agreements at the center of the dispute between the network and KOMO. The documents revealed that agreements with several broadcasters rewarded broadcasters significant increases in retransmission fees. Over a six year period, KOMO's rate increased 416 percent.

In a recent update, the News Tribune reports that the new contracts include yet another significant increase:

New contracts that took effect Jan. 1 show the broadcasters’ fees are rising far faster than inflation.

No fee has increased over the years more than that of Seattle broadcaster KOMO. In 2009, the broadcaster received only 31 cents per month per home from Click. That amount has soared this year to $2.43 — a 684 percent increase.

Had the broadcaster’s fee risen equal to inflation, KOMO would earn only 34 cents per subscriber — or approximately $78,000 for all of 2015.

Instead, the new fee structure will mean Click pays about $561,000 this year. That cost is likely to be passed down to the utility’s 19,250 subscribers.

Chris Gleason, speaking on behalf of Tacoma Public Utilities, said the utility board will now have to consider a 17.5 percent rate increase for 2015. The original plan was to incorporate a 10 percent increase in 2015 and a similar increase in 2016. Four other channels are instituting similar increases:

“We don’t really have a lot of bargaining power with these broadcasters,” Gleason said. “... We do negotiate with them but there’s not a lot of leverage for us.”

Escalating fees could accelerate the trend of “cord cutters” — people who don’t have a cable subscription and who watch shows online.

All providers must contend with these increases in retansmission fees but small networks are particularly hurt because they cannot afford to buy the entities that create the fees. Comcast can hedge against increasing prices by demanding an ownership stake in the channel or buying them outright.

The largest cable companies also have more leverage - a channel is more reluctant to go dark across Comcast's millions of viewers than the 20,000 on Click!. The idea that we can have a competitive market for these services while content owners hold all the cards is misguided and we believe the FCC and Congress should be addressing these problems before more small cable companies are forced out of the market.

Tacoma's Click! Introduces 100 Mbps; CenturyLink Lies to Steal Click! Business

We have watched Tacoma's Click! Network for years, sharing its advances and benefits with you. The latest achievement in Tacoma is a new option for customers - 100 Mbps.

The network is a division of Tacoma Power, which has been  providing electricity to the community for over 100 years. The municipal utility upgraded recently to DOCSIS 3.0, increasing Internet speeds for customers. 

Click! allows independent service providers to offer Internet access on the network rather than offering that service directly. This approach has resulted in less revenue for the publicly owned network, creating delays in paying down the debt from the infrastruture investment. Nonetheless, Click! has create benefits far in excess of costs -- from increased investment from incumbents to much lower prices for residents and businesses.

RainerConnectAdvanced Stream, and Net-Venture all offer retail services on the Click! network.

Customers from the three ISPs have multiple choices in speed and price, varying from $29.95 for up to 6 Mbps to $189.95 for the new 100 Mbps option. The choice allows consumers to tailor their Internet (and their Internet bill) to the their individual needs. Vibrant competition continues to create choice and affordable consumer prices. Regardless of what network they subscribe to, Tacoma residents tend to pay less than their Seattle brethren.

Unfortunately, it was no surprise to come across a recent news story that describes CenturyLink's misleading sales tactics. CenturyLink salespeople have gone door-to-door and told people Click! is closing. C.R. Roberts from the News Tribune covered the story in mid-July. According to the report, even after Click! contacted CenturyLink to complain, the lies continued in parts of the city. This is no single anomaly, we have heard of similar tactics being used in the past.

Seattle's Short History of and Bleak Future for Community Broadband

We have followed Seattle's on-again, off-again consideration of a community broadband network for years and have occasionally noted the successful cable network in nearby Tacoma.

Seattle Met's Matthew Halverson has penned a short, impressive article explaining the trials and tribulations of Tacoma while also exploring why Seattle's Mayor has abandoned his goal of a broadband public option.

Before the massive cable consolidation that has left us with a handful of monopolists, we had a larger number of smaller monopolists that abused their market power to limit competition. One of the worst was TCI, which refused to upgrade its awful services in Tacoma, which pushed Tacoma to build its own network. TCI suddenly decided it did care about Tacoma.

TCI wouldn’t go down easily, of course. For the next year, as the City built out its system, the cable giant took advantage of the utility’s biggest weakness: All of its plans, from the kind of equipment it would buy to its construction schedule, were public information. So when Tacoma Power put in an order with its supplier for, say, coaxial cable, it found that TCI had already bought every foot of it. “But we started in one area of town and luckily we were able to get just enough material,” says Pat Bacon, Click’s technical operations manager. “We just inched our way through it and, before you knew it, we were a presence.” By July 1998, Click had its first cable subscriber, and the first broadband Internet user signed on in December 1999.

A substantial portion of the article is devoted to the dynamics around open access between the utility and independent providers -- an important read for anyone considering the open access approach.

Halverson did his homework on this article and I think he got it mostly right. I think the FiOS-wired suburbs do present a larger threat to Seattle than suggested, but it certainly does not compare to the approaching-existential crisis faced by Tacoma fifteen years ago.

I wish I could disagree with his conclusion that Seattle is unlikely to get a community fiber network but unless the community rises up to demand it, elected officials are unlikely to see any benefit to making such a long term investment.

10 Years Later - Tacoma and LaGrange

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

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

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

Fast forward to today, and this paragraph:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tacoma Offering Tips to Seattle

Seattle's new mayor continues to impress me as he makes good on his pledge to build a publicly owned fiber-optic network in the City. He has just met with the mayor of Tacoma to discuss lessons learned from the Tacoma Click! network.

We have previously discussed Click!, an HFC network run by Tacoma's public utility. Here are some additional benefits from the article:

Since its approval in 1997, Tacoma’s hybrid fiber coaxial network has, among other things, ushered in a cable television service, offered customers three high-speed retail Internet service providers, enhanced Tacoma Power’s electrical system and created a communications network among government institutions. In turn, the network and its programs have drastically reduced market rates for cable TV and Internet subscribers; saved local governments about $700,000 in annual expenses; and created several promising projects, such as “smart meters” that can gauge utility consumption electronically and “pay as you go” account options for electricity customers, she said.

I was glad to see the article noting the many differences between when Tacoma built their network and the present situation in which Seattle finds itself. Seattle certainly has bigger difficulties than Tacoma did, but they should continue examining their options to determine if the community should build its own network.

A local blogger was more pessimistic after reading the article, but one of the comments on the post bears repeating:

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

Photo used under creative commons license from flickr.

Schrier Stays in Seattle, Fiber Network to Follow?

After campaigning on building a publicly owned fiber-to-the-home network in Seattle, Mayor McGinn has decided to maintain leadership at the Department of Information Technology. Department head Bill Schrier will stay on, continuing his work that lays the groundwork for a community-owned network.

He said he expects the city to apply for federal stimulus money in the first part of the year to move toward that goal. In addition to improving broadband access in homes, the initiative could help Seattle City Light implement smart-grid infrastructure, and improve public safety communications.

Another article further notes their shared ambition:

"Mayor-elect McGinn ran on a platform of bringing fiber to every home and business in Seattle, something I've advocated for several years," Schrier commented.

No post discussing broadband in Seattle is complete without a reference to Glenn Fleishman - who both wrote another story discussing the situation and then patiently responds to many comments in the thread below it. Discussing Tacoma's publicly owned Click! network, he notes that Tacoma's investment benefited everyone:

Click being built actually helped what has become Qwest and Comcast: by creating a market and making it feasible for professionals who need high-speed Internet access in Tacoma to live there, Click spurred the two incumbents to improve their networks, compete, and gain new revenue. Comcast actually thanked Tacoma Power publicly years ago; not sure it would today, but it was seen as a big boost for the viability of competitive broadband.

Photo used under creative commons license from flickr.

Tacoma Raises Prices for Cable Subscribers

Tacoma's Click! network, which recently celebrated its 10th anniversary, has announced a coming price hike to cover increased costs for carrying channels.

Tacoma's Click! network is a long-standing example of a community coming together to solve a common problem - ensuring they have the telecommunications infrastructure necessary for success in the modern world. Being built before FTTH was viable, the network is a combination of fiber and coaxial cable.

More importantly, they have enacted important rules to ensure everyone has access to the network:

Click’s low-income and senior customers will continue to receive a 20 percent discount, Anderson added.

The reason for the price increase is not to generate profits for absentee shareholders, but due to an increase in programming costs:

Click officials said the primary driver behind the proposed customer rate increases is newly imposed “retransmission” fees by local broadcasters. In all, Click faces about $750,000 of the new fees in 2009 and 2010, Wykstrom said.

Facing declining advertising revenues and increased costs caused by the recent change to all-digital formats, local broadcasters required the payments when negotiating new agreements with Click, officials said. In the past, local broadcasts were provided free of charge to Click.

“They basically held us hostage,” said Diane Lachel, Click’s government and community relations manager.

Seattle Mayoral Candidate Sees Public Fiber as Essential

Glenn Fleishman, of the excellent Wi-Fi Net News, recently interviewed Mike McGinn, a candidate for Mayor of Seattle that has talked frequently about the need for a publicly owned full fiber network in the City.

Larger cities have been slow to move on publicly owned broadband, in part because they typically already have some level of service available throughout the city (though perhaps not universally). Fleishman rightly notes this:

But is the fact that people can “only” get slow Internet connections enough to float $450 million in bonds, however financed? McGinn says that there are two separate reasons to push for universal availability. “Access to the Internet is access to the economy, access to the community, in some cases access to democracy, access to issues,” he says. But it’s also about the bottom line: “It’s an essential [piece of] infrastructure to compete in a world economy.”

Fleishman also notes a concern frequently cited by incumbent carriers who don't want a public network to compete against:

There have been many concerns raised about public entities, especially those with regulatory power over competitors–such as Seattle’s cable franchise board that controls access to public rights of way and facilities–entering the broadband market. But most of those concerns imply that the market will solve the problem. However, with no requirement for building out service to all customers, or having the same level of service available, an efficient market won’t provide universal coverage.

In my experience, this is a theoretical fear. Typically, when a community decides to build its own network, the incumbents rush to upgrade their infrastructure (often after denying that they thought there was a need for faster services in the area). If local governments were abusing their authority over the right of way, you can bet there would have been lawsuits filed - these incumbents have sued over everything else. I do not know of a single successful lawsuit against a local government for what would be a violation of law.

Getting back to the interview, they discuss both Lafayette, Louisiana:

The reason for the fight wasn’t about the right to 500 channels, about low prices, or about the city wanting a piece of the action. It was about the city’s desire to have 21st century technology in place reaching every person, company, and institution.

and Tacoma, Washington:

But look at Tacoma. In the mid-1990s, US West could take 18 months—18 months!—to provide a new phone line, and TCI had no interest in upgrading the infrastructure for cable and broadband in the city boundaries, focusing on wealthier suburbs. Does anyone think that the city would be what it is today had the Click! Network not transformed a developing nation infrastructure into what’s acknowledged as one of the most-wired cities in the country?

I hope that Seattle moves forward and develops a plan to get a better sense of the costs and benefits. If they don't, the City will likely suffer due to the Verizon deployments in the suburbs - connections that offer people competitive speeds even if they don't get the better support that typically comes from a locally owned network.

Photo used under creative commons license from flickr.

Tacoma Click! Network 10 Year Anniversary

Congratulations to Click! on its ten years of service to the community.

Video: 
See video