David Isenberg, of isen.blog, has published a short history of Reedsburg's community fiber network that he previously wrote for the FCC when they were gathering evidence of successful networks they would later ignore in formulating a plan to continue the failed status quo of hoping private companies will build and operate the infrastructure we need.

Nonetheless, one cannot say that smart people like David did not try to help the FCC overcome its obsession with national carriers who dominate the conversations, and whose employees often work periodically with the FCC in what we call the revolving door (which itself, is a reason the FCC has been captured).

Back to Reedsburg; it is a small community approximately 55 miles northwest of Madison that just happens to have far better broadband service than just about anywhere else in Wisconsin.

David writes,

RUC first entered the telecommunications business in 1998, when it constructed a ring to tie its wells, its five electrical substations together and to provide Internet access for its high school, middle school and its school administration building. In planning the ring, the city asked Verizon and Charter if they would build it, but they were not responsive. RUS built a partly aerial, partly buried 7-mile ring of 96-strand fiber at a cost of about $850,000. Internet access was provided by Genuine Telephone, a tiny subsidiary of LaValle Telephone Cooperative which ran a fiber from LaValle, about 8 miles NW of Reedsburg.

As they were building the ring, local businesses asked to be connected as well. Reedsburg took the path that so many communities have followed, start by building for yourself and expand opportunistically. Of course, this requires that you originally engineer the network so it can be later expanded, which is good practice regardless of your future plans.

Reedsburg used bond anticipation notes, a financial mechanism that few others have used in building similar networks.

A local bank loaned the initial $5 million in bond anticipation notes for planning and construction. Then RUC issued an additional $8.5 million in bond anticipation notes to complete the project. These are instruments that are ultimately backed by the city’s taxpayers; they must be converted to asset-backed revenue bonds within five years.

In building the pass, Reedsburg ran the drops right to the side of the house, a practice that now seems fairly common in smaller builds (by which I mean less that 10,000 premises or so). This lowers the future costs of having to send trucks out individually to connect a home to the pass.

The plan was not just to pass every household in town, but to run an actual fiber drop to every house. As fiber was built out, empty NID boxes were placed on each home with the fiber drop cable coiled inside; NID electronics were installed when service was turned on. Preceding construction there was a mail campaign followed by a door-to-door campaign to get permission agreements signed to construct the fiber on private lands. By Mr. Mikonowicz account, only about ten home owners refused to give permission to supply a drop and a NID box.

David discusses the take rates, which I won't reprint here as I have already taken more liberties in quoting his text than might be polite. However, I do want to quote one last piece -- the one in which he notes that the network pays for itself even if one does not include the many positive externalities such as much better customer service, economic development from having affordable 100Mbps symmetrical service available, the much faster connections schools have at much lower costs (which David does not actually mention), etc.

The network turned EBIDTA-positive in 2007 and cash flow positive in 2008. Today, after debt service and other costs, including salaries, video content charges, Internet access, 911 contribution and other costs, there’s about $500,000 per year for network expansion. Expansion planning includes two small residential developments just outside of town.

And as a final note, Reedsburg did receive a broadband stimulus award that will allow it to accelerate network expansion in the surrounding community.

Wilson's Greenlight community fiber network is ahead of schedule. They continue to operate ahead of the business plan, despite a few difficulties that offer lessons to up and coming community networks.

We recently covered the fallout from their application to the broadband stimulus program where they had to disclose network information to their competitors.

Fortunately, that was not the only news last month from North Carolina's first all-fiber citywide network. They also surpassed 5000 subscribers and remain 6-9 months ahead of their business plan in take rate, according to the Wilson Times.

The number of customers is expected to reach 5,300 by the end of the fiscal year if the current trend continues, according to Dathan Shows, assistant city manager for Broadband and Technical Services. The city's current business plan calls for Greenlight to reach 5,000 customers by the end of the third full year of operation, which will be June 2011.

This is not the first time the network has exceeded projections; the network was built faster than expected and quickly jumped out ahead of take rate expectations.

One of the reasons Greenlight may be growing is its attention to local needs, as illustrated by the network finding a way to televise local football matches that otherwise would not have been available.

However, the Wilson Times story goes into much greater detail regarding the competition from Time Warner Cable. As we regularly see, Time Warner Cable is engaging in what appears to be predatory pricing to retain customers and starve Greenlight of new subscribers.

A lesson to other community networks, Wilson is documenting the deals TWC uses to keep subscribers. All communities should keep these records.

"Time Warner Cable's market tactics include anti-competitive pricing that interferes with Wilson's ability to secure customers through normal marketing," the application [for broadband stimulus] states. "TWC offers below-market rates to customers seeking to switch to Greenlight, locking them into multi-year deals in exchange for name-your-price rates that are not advertised and made on an ad hoc basis when customers call to switch to Greenlight."

Running the numbers of these discounts leads to a total community savings of over $1million a year that subscribers to Time Warner Cable are saving over what they would be paying in absence of a community network.

The article goes on to quote Catharine Rice, someone who has a very strong grasp on the reality of broadband in communities across the country.

Rice describes what Time Warner Cable is doing as "cross-subsidizing" and charging higher rates elsewhere so it can offer lower rates in Wilson. Rice said Time Warner Cable is keeping pricing below cost in Wilson to try to drive Greenlight out of business.

"Somebody has to start looking at what Time Warner is doing in Wilson," Rice said. "When I step back and look at this whole thing, it's clear as a bell what's going on. Time Warner doesn't want to upgrade its cable plant."

Let's take a look at the broadband Time Warner Cable offers and compare it to Greenlight. All speeds in Mbps. Time Warner Cable does not make it easy to understand what the upstream speeds are, so I tried to piece it together from a variety of sources.

TWC has much slower options, from a .768/.384 package up to a "turbo" 15/1 (for $56.90). Wilson offers only one internet-only package - a 20/20 connection for $59.95. If bundling, Wilson has 5 packages from 10/10 at $34.95/month to 100/100 for $300/month.

It should be noted that the 15Mbps down TWC offer is faster that what TWC offers in nearby communities, suggesting they either upgraded their Wilson plant slightly or they are just being more bold in exaggerating their services. Either way, I'm willing to bet that the actual TWC "up to" 15 Mbps is slower than the 10Mbps service from Greenlight.

It is hard to compare TWC to Greenlight, much like comparing a Vespa to a Ducati. Nonetheless, TWC's size and market power allow it to try to run competition out of the market.

Finishing up, another lesson to communities who are planning to build their own next-generation network: be aware that you will have to deal with people who do not pay their bills. Wilson has had to deal with what seems to be an abnormally high number of these:

To date, Greenlight has disconnected just over 1,000 customers due to nonpayment. Shows said these are customers who received Greenlight service but never paid a bill. As a result, the city has had to "tighten standards," Shows said, on deposits. How much a customer pays for a deposit is based on their credit rating and on the services to which they subscribe. The city's finance department handles collections for Greenlight.