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In Kansas, Chanute Explores FTTH Options

Last December, we reported on Chanute's decision to move forward with plans for a FTTH network. The community has a fiber and wireless network in place that serves utilities, public facilities such as libraries and schools, and several businesses. The network also provides free Wi-Fi across the community. As we discussed in our 2012 case study, Chanute developed its network incrementally over two decades with no borrowing or bonding.

In a City Commission work session on May 5, officials reviewed several options for an FTTH network. In a nutshell, the City is contemplating their involvement in the operation of the future network.

Utilities Director Larry Gates presented several options, reported the Chanute Tribune. Two choices stood out for the working group members:

Scenario C calls for the build out of city provided fiber optic-to-home broadband internet services. Service drops would only be provided to homes that want the internet services.

Under Scenario C, the initial investment would be about $10,926,842 to build the fiber core. The city would need $9,468,033 in funding to complete the project. The project would become cash-flow positive in two years, one month. It would take five years, nine months to pay back financing for the project. The 20-year net present value for the entire system would be an estimated $40,623,151.

Scenario D calls for a build out of the fiber optic-to-the-home system for private communications companies to pay a fee to the city to lease the network and provide services to residential customers. The city would seek private companies for voice, video and internet services.

Under Scenario D, the initial investment would be about $13,906,416 to complete the build out. The city would need $9,468,033 in funding to complete the project. The project would become cash-flow positive in one year, seven months. It would take eight years, 10 months to pay back financing for the project. The -20 year net present value for the entire system would be an estimated $25,667,301.

Under an altered Scenario D, the City would lease out the network for five years to a private company that would offer triple-play services to residents. At the end of the time period, the City would take over.

Several city officials expressed an aversion to city run video services.

“There is not much profit in video,” Gates said. “Provisioners are pretty much naming the price on that.”

“From a business standpoint, providing video is going to cost us more,” [Mayor Greg] Woodyard said. “We’re not going to be able to see a return on that investment.”

An April Tribune article reported on an outreach meeting held by City Commissioners. Brian Inbody, president of local Neosho Community College shared his experience with the network:

“It is as necessary to us as electricity, water and gas,” Inbody said. “We save about $30,000 year over what we were paying through AT&T to provide that service."

Local schools Superintendent James Hardy also spoke to the value of the publicly owned fiber infrastructure:

“If we didn’t have fiber, we couldn’t have school anymore,” Hardy said. “When we’re buying text books and we have text book rotation, half of what we pay for a text book is web-based material. When those teachers turn on their smart boards that are hooked to a computer, everything they are pulling down is off websites, because everything is web-based.”

At the public meeting in April, commissioners addressed concerns about a five percent franchise fee that commenced in December 2013. The network serves public telecommunications and utility operations and now needs relacement equipment. The franchise the fee will cover the costs.

“We were talking about being short money for equipment,” [Senior City Commissioner Tim] Egner said. “We were trying to figure out a way, without raising mill levies, how to come up with this money. With the franchise fee you’re going out over a larger area. You’re going outside the city. With the franchise fee, you can choose how much electricity you use. You can choose how much gas you use.”

The lack of upgrading maintenance has caught up with the city, Egner said.

“When we cut mill levies,” Egner said, “we had to adjust. We had to stop buying things. We stop putting money back for equipment. At some point that catches up with you. So, we had to figure out the best way to do it.”

The working group will meet again later in May to continue the discussion.

Governing Looks at What the Comcast - Time Warner Cable Merger Could Do to Munis

The debate surrounding the proposed Comcast Time Warner Cable merger continues. The Department of Justice and the FCC ruminate over the deal while the media speculates about the future.

Governing recently published an article on potential side effects for the municipal network movement. Tod Newcombe reached out to Chris for expert opinion.

From Governing:

Partially thanks to Comcast and other cable giant's lobbying, 19 states have already passed laws that ban or restrict local communities from setting up publicly owned alternatives to the dominant provider in the area. Municipalities that pursue publicly owned broadband often cite several reasons for their efforts, ranging from lack of competition and choices in the area to a desire for faster speeds at lower costs. But Mitchell fears the lobbying power of a combined Comcast-Time Warner would choke off what little leverage remains for local governments when it comes to gaining state approval to build publicly owned broadband networks.

Unfortunately, the cable company cyclops borne out of this deal would create a ginormous lobbying monster. Comcast and Time Warner Cable wield significant political influence separately; a marriage of the two would likely damage the municipal network movement. The Center for Responsive Politics reports Comcast spent over $18 million in 2013; Time Warner Cable spent over $8 million.

Chris told Governing:

"Judging by the amount of opposition to the merger, I think people are seeing that we're at a tipping point and that there are ways they can make investments at the local level and control their own destiny," said Mitchell. "A lot of people and local businesses understand that the Internet is really important and that we can't trust it to a few corporations. But I don't see that level of understanding from most elected officials yet."

Catching Up with the RS Fiber Coop in Minnesota - Community Broadband Bits Podcast #99

In the nearly two years since we launched this podcast with an interview from Minnesota's rural Sibley County, the project has evolved significantly but the need for better Internet access remains a constant.

Today, we interview Coop Vice-Chair Cindy Gerholz and Winthrop Town Manager Mark Erickson to get an update on the fiber-to-the-farm project. The Renville-Sibley Fiber project has transitioned from a municipal project to a cooperative. Local towns and a sizeable majority of townships will together issue an economic development bond to provide seed capital to the coop.

We discuss the project, financing arrangements, and the need to make sure that no one is left behind. Stay up to date with the project on their website and Facebook.

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 via iTunes or via the tool of your choice using this feed.

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

Thanks to Valley Lodge for the music, licensed using Creative Commons. The song is "Sweet Elizabeth."

Westminster Budgets for Open Access Fiber Network

On Monday, May 12, Westminster moved another step closer to deploying its open access citywide fiber network in Maryland. The Common Council approved a FY15 budget that includes $6.3 million for an FTTH network. The Carroll County Times reported that the $64.8 million budget was adopted 5-1. The opposing Council Member voted no on a different issue.

Last summer, the community launched two pilot projects; they installed fiber in a local retirement community and in the Westminster Technology Park. Community leaders decided to expand the pilots to the Air Business Center. They are already seeing results, with a women's fashion distribution center that decided to move from New York City to Westminster for the network.

We touched base with Dr. Robert Wack, Westminster Common Council President and the person spearheading the project. Dr. Wack told us businesses have been clamoring to get fiber service. Connectivity in the area is so bad, "they are desperate."

Community leaders want to connect 9,000 homes and 500 businesses. Dr. Wack told us the community expects to break even in 3 - 5 years; the build out should be complete in 2 years. Westminster expects to release an RFP for construction within the next week. They will release an RFP for a network operator in June.

Another Carroll County Times article described the basic plan for the project:

Westminster’s fiber network will be a “last mile” project, with the city paying to install “dark fiber” to the door of every home and business in the city and connect to the county’s fiber optic backbone, the “middle mile,” according to Wack.

Dark fiber is fiber optic cables which are connected but not in use, or “lit,” he said.

Wack compared the network to roads, explaining that 10 years ago — though fiber technology existed — if Westminster had laid the cables they would have been useless, similar to constructing roads in the city with no connection to the outside world.

Once the infrastructure is in place, a third-party service provider will install the necessary electronics and run the network, according to Wack.

Westminster's pilot project fiber is located near the Carroll County Public Network, allowing an easy connection to a more extensive infrastructure. From the Times article:

“We see the need and we’re ready to spend the money to get it done,” Westminster Common Council President Robert Wack said.

Next City Interviews Christopher on Municipal Networks

Nancy Scola, a reporter with Next City, wanted to know about municipal networks. Naturally, she turned to our own Chris Mitchell. Nancy and Chris discussed some of the most pressing issues swirling around municipal broadband. Nancy begins:

At the moment more eyes than usual are focused on high-speed Internet’s uncertain future in the United States — from “open Internet” rules and municipal-run broadband to worry over Comcast’s pending Time Warner Cable merger.

Sitting in the middle of the debate is Christopher Mitchell, the director of the Telecommunications as Commons Initiative of the Institute for Local Self-Reliance. He has long advocated for city-run broadband networks such as those found in Lafayette, Louisiana, Chattanooga, Tennessee, and Bristol, Virginia.

Nancy: What’s the elevator pitch for municipal broadband?

Chris: That it’s a network responsive to local needs. Rather than decisions being made in a corporate boardroom on Wall Street, they’re being made by someone in town based on what’s going to benefit the community the most. And that’s going to be faster speeds, lower prices, better reliability, better customer service, those sorts of things.

Nancy and Chris also touch on issues such as municipal Wi-Fi, myths propagated by cable and telephone company lobbyists, and broadband as a utility. 

Tim Danahey and Chris Mitchell Talk Muni's

Tim Danahey recently brought Chris Mitchell on his show to talk about municipal networks and their role in preserving network neutrality. Tim is a fan of the Institute for Local Self-Reliance and our work.

Tim is a great interviewer because he is up on the issue and politically savvy. From the show website:

If President Obama or the FCC don’t stand up for the people, the open internet will soon end. If you want to get your internet voice out to the world, you may have to pay for the priority. Furthermore, you may have to out-bid well-funded corporate internet users. The President shows no sign of upholding his 2007 promise to sustain net neutrality and his appointee to head the FCC is a communication industry insider. What can the people do? First, try to get the President to keep his promise. If he won’t, then many communities in the United States are setting-up community-owned broadband service that is up to 40 times faster than corporate-owned internet service provides. It’s also less expensive and it is becoming a powerful economic development tool for communities that have already implemented it. In fact, it’s so good that Koch-funded ALEC is trying to shut it down. But we can do it. Here’s how.

 

"To the Point" Talks With Christopher on Munis and Net Neutrality

Public radio KCRW in Santa Monica recently interviewed Chris Mitchell as part of a panel on "To the Point." Host Barbara Bogaev spoke with Chris, U.S. Representative Anna Eshoo, Christopher Ali from the University of Virginia, and Gautham Nagesh from the Wall Street Journal.

Federal regulators are unveiling a plan that would create fast and slow lanes for content on the Internet. Guest host Barbara Bogaev examines how a "pay to play" broadband system would affect innovation, consumers, and the philosophy that everyone has a right to equal access to the flow of information on the web?

Chris comes into the discussion at 33:30 and brings his expertise on local issues to the conversation. FCC Chairman Tom Wheeler's recent comments included the announcement that he planned to use the FCC's power to remove preemptive state laws that have revoked local authority to decide whether a network is a wise investment.

The network neutrality conversation starts around 8:20 into the broadcast; the entire show runs just over 51 minutes.

Wheeler Tells Cable Industry He Intends to Remove Anti-Competitive State Laws

FCC Chairman Tom Wheeler is prepared to roll back restrictions that prevent local governments from deciding if a municipal network would be a wise investment. At the Cable Show Industry conference in Los Angeles, Wheeler told cable industry leaders the FCC will wield its powers to reduce state barriers on municipal networks.

Wheeler spoke before the National Cable & Telecommunications Association (NCTA) on April 30. These words perked up our ears and those of community networks advocates across the U.S. From a transcript of Wheeler's speech

"One place where it may be possible is municipally owned or authorized broadband systems. I understand that the experience with community broadband is mixed, that there have been both successes and failures. But if municipal governments—the same ones that granted cable franchises—want to pursue it, they shouldn’t be inhibited by state laws. I have said before, that I believe the FCC has the power – and I intend to exercise that power – to preempt state laws that ban competition from community broadband."

As our readers remember, a January DC Circuit Court of Appeals decision opened the path for the FCC to take the action Wheeler proposes. Since then, communities have expressed their desire for local authority with resolutions and letters of support. Communities in Michigan and Louisiana, Georgia and Idaho, Illinois, Maryland and Kansas, have shared their resolutions with us. A number of other communities have issued letters of support encouraging action under section 706.

Ars Technica contacted the FCC for more information on Chairman Wheeler's statements. Ars reported:

An FCC spokesperson contacted by Ars said that Wheeler "is not trying to make a distinction between 'ban' or 'limit.' The point is to look at the effect of the law."

The spokesperson said, "We will be taking up this issue in the technology transitions proceedings, and there should be an announcement about this in the next few weeks." It's too early to say "how [Wheeler] will address existing state laws."

As the big companies like Comcast consolidate, enforce bandwidth caps and continuously raise prices, municipal networks are more important than ever. Community owned networks are accountable to the people who use them and put the public good ahead of profit. Community networks are managed in your neighborhood, not in a corner office thousands of miles away.

The content of Wheeler's statement and his choice of venue inspires advocates for publicly owned networks. In order to keep a strong momentum rolling, we encourage you to express your support. The cable and telecommunications lobbyists are already working to prevent the FCC from taking action. When the FCC begins to act, we will want to demonstrate support.

Join our one-email-per-week newsletter to stay in the loop on these developments! If you are excited to demonstrate local support via a resolution or similar effort, let us know.

No Scale Advantage in Netflix Speed Ranking

Netflix has continued to publish monthly rankings of ISPs average speed in delivering Netflix video content to subscribers. Though they first published data about the largest, national ISPs like Comcast, AT&T, and the link, they have an expanded list with many more ISPs.

I recognize two municipal networks on the expanded list of 60 ISPs. For March 2014, the Chattanooga EPB network is ranked 4th and CDE Lightband of Clarksville, Tennessee, is ranked 7th.

With the exception of Google Fiber and Cablevision, the top 10 are regional or somewhat smaller ISPs. Combined with the significant spread across the rankings of the biggest ISP, we see no empirical evidence for any kind of benefits to subscribers from scale. That is to say, Netflix data shows that bigger ISPs do not deliver better customer experience.

We do see more evidence that fiber networks deliver faster speeds on average, with cable following, and DSL trailing distantly. This is why DSL networks are losing customers where people have a choice and cable is gaining (most often where there is no fiber option).

Any claims by Comcast that allowing it to merge with Time Warner Cable would result in better service should be subject to extreme skepticism. Many much smaller networks deliver faster connections and raise rates far less often that Comcast, which is at the high end of frequency in rate hikes.

The problem with the biggest companies is that they focus on generating the highest returns for Wall Street, not delivering the best experience to Main Street.

Paid Prioritization Threat Reinforces Value of Community Networks

Recent reports out of the FCC say that it will allow ISPs to create and sell "fast lanes" of Internet access to the companies with sufficiently deep pockets to afford them. While some people argue over whether this violates network neutrality principles or not, the more important point is that most communities have no control over how the networks on which they depend are operated.

The big ISPs, like Comcast and AT&T, are focused on maximizing revenue for their shareholders. It is why they exist. So they will want to make the fast lanes as appealing as possible, which in turn means making providers like Netflix unable to deliver a high quality product without paying special tolls to Comcast.

What does that mean for you? It means you should expect to see the big providers slow their already anemic pace of investing in higher capacity connections in favor of pushing content providers into the paid prioritization schemes. It also means that you may have to start paying more for Netflix or Hulu, where the additional money goes to the ISP you already overpay for comparatively lousy service.

A range of ISPs, from privately owned Sonic.Net in California to Chattanooga's Electric Power Board right up to Google have demonstrated that they can deliver a "fast lane" to everyone. This fight over paid prioritization is nothing more than the big cable and telephone companies trying to increase their profits while minimizing needed investments in higher quality service to everyone.

Unless you live in an area with a community-owned network. Unlike the big providers with a fidiciary responsibility to distant shareholders, community owned networks are directly accountable to the community. Their mission is to maximize local benefits, not extracting as much wealth from households as possible. ISPs like Sonic also have much more reasonable policies but over time these privately owned ISPs are vulnerable to being bought by the big national providers.

Community owned networks are far less likely to engage in paid prioritization because it adds no value for subscribers in the community. In fact, the worse the big cable companies act in terms of ripping off subscribers, the more valuable community owned networks become by providing a better level of service.

Another example of this is monthly data caps - the big cable companies have been "experimenting" with them in several markets in the south but always in areas where the community has not built an alternative option. Community networks not only offer a much better option to the community, they change the behavior of incumbents who are accustomed to operated in non-competitive environments.

The final benefit of community owned networks is that if the federal regulators fall down on the job AND your community-owned networks engages in behavior that hurts subscribers, there is a democratic process for rectifying that, whether in elections for the city council or coop board.