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Chanute Receives State OK to Bond for FTTH Deployment

The Kansas Corporation Commission (KCC) will allow the city of Chanute move forward with its plan to serve residents and local businesses with its municipal network reports the Wichita Eagle. KCC staff had recommended that the community, which has built out a network over the course of decades, receive KCC approval. 

In keeping with an antiquated 1947 state law, K.S.A. 10-123, the city needed KCC approval to issue the revenue bonds. In keeping with the statutory requirements, the KCC found that the expansion is necessary and appropriate for the city, its consumers and investors. The KCC also also determined that the expansion will not duplicate an existing utility service.

In its filing [PDF], Chanute indicated that its network is an essential part of the local economy and the community's future:

Chanute is a rural community, and like all rural communities, access to broadband is fundamental to the well-being of its citizens and even to the survival of the community itself. Chanute does not need to convince the Commission of the importance of having access to a high- speed broadband network. The Commission is well aware of that need. The investments contemplated for Chanute's broadband network are necessary and appropriate to allow Chanute to meet that need in its territory.

As the city points out, incumbents AT&T and Cable One, do not offer anything close to the level of service of the planned gigabit FTTH network. As we cover in our 2012 report on Chanute, AT&T and Cable One seem to have no interest in serving the community beyond minimum expectations. It was the need for better services that inspired the city to build out its infrastructure and offer services to local businesses.

Prior the the KCC ruling, the Wichita Eagle reported that AT&T requested and obtained permission to intervene in the proceeding. AT&T's subsidiary Southwestern Bell Telephone Company (SWBT) petitioned to intervene in November [PDF], stating:

SWBT's interests and those of its customers may be affected by any order or determination of the Commission as may hereafter be adopted in the above- captioned proceeding.

AT&T told the Eagle:

“Any decision made by the KCC could impact AT&T’s business operations in the area, which is why we asked to intervene in the proceeding,” the company said in a written response to questions from The Eagle. “AT&T remains interested in both broadband issues and the work of the KCC.”

Larry Gates, Director of Utilities in Chanute, 
told the Eagle that the city is ready to issue the revenue bonds and begin connecting customers as soon as the KCC approves the request.

In their filing, the city also commented on the the outdated nature of the state law requirement. From the Eagle article:

In the commission case, Chanute is arguing that the 1947 law was actually designed to protect municipalities from defaulting on bonds because of private-sector competition, not to protect private-sector providers from competition with local government.

Since then, lawmakers and regulators have almost entirely deregulated telecommunication services, counting on competition in the marketplace to keep providers from charging too much or providing substandard service.

“This reasoning (behind the 1947 law) reflects an environment where construction of a telecommunications network was considered a natural monopoly, where one company could supply an entire market at less cost than two or more companies,” Chanute’s filing said. “That is no longer the case in the telecommunications marketplace.”

The 1947 law “does really sort of fly in the face of everything that has been said about competition,” [David Springe, chief consumer counsel for the Citizens' Utility Ratepayer Board] said. “It’s either a competitive world and you can stand on your own two feet, or it’s not.”

KCC staff agreed with Chanute. At the time the law was implemented, it was meant to protect the interests of the monopolies that served the rural areas, but the Telecommunications Act of 1996 shifted policy to encouraging competition.

There are other providers in the area, writes staff, but none of them can provide the caliber of services Chanute will offer. Because AT&T and Cable One do not offer services anywhere near the gigabit FTTH planned by Chanute's broadband utility, there would be no duplication of services.

Staff also agrees with the city, when it analyzes the need for the expansion. From the staff report [PDF]:

Upgrading Chanute's facilities would not only benefit the citizens of Chanute but its community anchor institutions and community business partners as well. In addition, by improving and expanding upon the fiber optic network currently in place by Chanute, Chanute is protecting its current investment. Staff therefore believes the expansion plans as contemplated are appropriate for the municipality and its consumers, and for the protection of its investors.

For a look back at Chanute's story, listen to episode #16 of the Community Broadband Bits podcast. Chris interviewed Larry Gates and then City Manager JD Lester.

Community Broadband Media Roundup - December 12, 2014

This week in Community Broadband networks... partnerships, cooperatives, and going-it-alone. For a background in muni networks, check out this recent article from FiscalNote. The article highlights Kansas and Utah's fight for improving beyond the minimum speeds. 

Speaking of minimum, the FCC announced its new "rock bottom" for regulated broadband speeds. Ars Technica's Jon Brodkin reports that despite AT&T, Verizon, and the National Cable and Telecom Association's protests, ISPs that use government subsidies to build rural broadband networks must provide speeds of at least 10 Mbps for downloads.

Rural Americans should not be left behind those who live in big cities, the FCC announcement today said. "According to recent data, 99 percent of Americans living in urban areas have access to fixed broadband speeds of 10/1, which can accommodate more modern applications and uses. Moreover, the vast majority of urban households are able to subscribe to even faster service," the FCC said.

The FCC plans to offer nearly $1.8 billion a year to carriers willing to expand service to 5 million rural Americans. 

This is a step in the right direction, but we are alarmed to see a download:upload ratio of 10:1. People in rural areas need to upload as well as download - our comments to the FCC strongly recommended raising the upstream threshold as well and we are very disappointed to see that remain a pathetic 1 Mbps.

And, from TechDirt's own "who can you trust if you can't trust the phone company department," Karl Bode found that a study by the AT&T-funded Progressive Policy Institute concluded that if Title II regulations were passed, the nation would be "awash in $15 billion in various new Federal and State taxes and fees. Bode writes that the study cherry-picked and conflated data:

The reality the broadband industry doesn't want to acknowledge is that very little changes for it under Title II if carriers aren't engaged in bad behavior. The broadband industry is fighting Title II solely to protect potential revenues generated from abusing uncompetitive markets. That this self-serving behavior is being dressed up as concern about the size of your broadband bill is the industry's best comedic work to date.

Cities Pursuing Community Broadband

Nancy Scola reported on the growing collective of "Next Century Cities." 

[The group's] early expansion is a signal of what seems to be a shift in the way Americans are thinking about high-speed Internet access: the idea that cities will the battlegrounds for the playing out of the broadband debates. One effect of these cities working so closely with Google as it rolls out its fiber network in places like Kansas City and Austin is a realization that mayors can take broadband into their own hands -- whether that's through a municipal solution like Chattanooga's gigabit network or through partnering with traditional Internet service providers such as Comcast or Time Warner Cable.

Other partnerships are also moving muni networks forward

At the same time as the Next Century Cities announcement, the Department of Agriculture announced $190.5 million in grants and loans for rural broadband and telecommunications infrastructure.

"Modern telecommunications and broadband access is now as essential to the businesses and residents of rural America as electricity was in the 1930s," said Agriculture Secretary Tom Vilsack, in a USDA statement. The funding will go towards providing, “broadband in areas that lack it, help rural-serving public television stations begin using digital broadcasts and support other telecommunications infrastructure improvements."

Jason Meyers with LightReading explains why utility companies (like EPB in Chattanooga) are positioned so well to be home to gigabit networks.  

Several communities are considering local options for networks. Some are just in the earliest study phases: Medina County and Athens in Ohio and Walla Walla, Washington are among them. RS Fiber in Minnesota has approved its updated business plan and financial strategy, meaning it can move forward with its cooperative network, and several communities in Northeastern Oklahoma are pursuing a cooperative plan as well.

It looks like the push for local options in Colorado is having an affect on other communities. Aspen and Pitkin County have submitted requests for proposals-- perhaps inspired by Longmont, Boulder, and the rest of the communities we reported on after the November referenda.  

Meantime, Bruce Kushnick with the Huffington Post reported this week that communities all over the country have been paying for fiber infrastructure upgrades, but have seen almost none of the investment. 

Starting in 1991, the phone companies went state-to-state to get changes in state laws, known as "alternative regulations" to charge customers for the replacement of the copper wires that were part of the state-based utility, like Verizon New Jersey, with a fiber optic wire capable of 45 Mbps in both directions, the standard speed for broadband in 1992.

And though it varied by state, this fiber optic wiring was to be done everywhere -- urban, rural, and suburban, rich and poor communities and cities, and even the schools were to be wired in some states. All customers were paying for the upgrades of this future fiber optic broadband utility so they all deserved to be upgraded.

Check it out and see if your community is on the list. And if you think this isn't the first time you've heard about this Big Ripoff, you're right-- We interviewed him on Community Broadband Bits Episode 28

Net Neutrality

This week, New Jersey's Cory Booker and Maine's Angus King defended net neutrality on CNN. 

The Internet is one of the most powerful tools on the planet. Across the globe, millions of people connect every minute of every day to harness its wealth of information, exchange ideas in an open platform and foster the type of innovation and entrepreneurship that spurs economic growth.

And today, it's never been more at risk in the United States.

Washington Post's Brian Fung reported that there are hints that the telecom industry is preparing for a new Title II reclassification. Verizon's CFO Francis Shammo said, in a nutshell, that the company would do just fine if the FCC imposed the stricter regulations. 

"I mean to be real clear, I mean this does not influence the way we invest. I mean we're going to continue to invest in our networks and our platforms, both in Wireless and Wireline FiOS and where we need to. So nothing will influence that. I mean if you think about it, look, I mean we were born out of a highly regulated company, so we know how this operates.

Despite this very clear statement, we expect to see still more claims from groups like the AT&T puppet Progressive Policy Institute that Title II would somehow cause major carriers to invest even less in networks across the United States. Though, if the market were half as competitive as they claim, any firm that invested less would be in big trouble! How do we know when they are lying? Well, are their lips moving?

Community Broadband Media Roundup - December 5, 2014

After successfully fighting a Kansas state law proposed in February that would have outlawed community networks entirely, the city of Chanute is being required to follow an outdated 1940s law that requires them to ask permission to move forward with a bond initiative that would fund a high speed Internet network to businesses and residents. And, AT&T is officially intervening in the city’s efforts. 

Our most favoritest headline of the week about this story comes from Brad Reed with BGR: “AT&T wants to know why a town is building a 1Gbps network when it already offers 6Mbps DSL." Yah, Chanute, what gives?!

Dion Lefler with the Wichita Eagle reported this week that the city has been ordered to follow a 1940 state law requiring it to get permission to sell bonds that would fund a project to provide the town’s 9,000 residents with high speed Internet. 

Chanute officials say the law requiring commission permission to expand is outdated, because it was written in the days when the telephone company was a monopoly… “AT&T is the incumbent telephone company and Cable One is the incumbent cable TV operator,” the city’s filing to the commission said. “Neither of those providers offers the level of service throughout Chanute’s utility service area that Chanute will be able to offer its citizens as a result of the investment planned for Chanute’s network. As such, there will not be a duplication of existing services, even if such a consideration were still relevant today.

Kate Cox with the Consumerist goes further:

AT&T has a long track record of very vocally opposing even the mere idea of municipal broadband projects. The company has worked hard and spent lots of money helping enact state laws that prohibit public broadband expansion.

They have also argued that not only should public fiber projects be banned any place that they (or anyone else) already serves, but that those projects should be banned anywhere they might choose to do business later on.

And Jon Brodkin with Ars Technica noted the real cause for AT&T’s worry: the city would charge people just $5 more per month for Gig service than AT&T does for its bargain-basement 6mbps service. Yikes!

Wendy Davis with MediaPost covered the story as well:

If the new network moves forward, residents would have every reason to defect from AT&T in favor of the new service -- unless AT&T can step up its offerings.

So far, AT&T hasn't shown an inclination to do so in Chanute. While AT&T plans to expand its fiber optic network to dozens of cities, Chanute isn't one of them, according to advocacy group Public Knowledge. That organization today issued a public call for AT&T to avoid putting up obstacles to a new fiber network. “No one should deny rural America the choice of building high-speed broadband networks in a world where the Internet is so vital to a community’s growth.

MSMolly with FireDogLake offered her insight this week on the delicate balance ISP’s walk when it comes to regulation:

AT&T isn’t opposed to government handouts, though, as long as they are flowing to the private sector. The company argues that community broadband networks “should not receive any preferential tax treatment,” and that only private companies should be given special treatment. AT&T said, “Indeed, any tax incentives or exemptions should be provided, if at all, to private sector firms to induce them to expand broadband deployment to unserved areas.”

AT&T has been going state by state paying asking state lawmakers to get rid of most remaining consumer protections, such as those requiring continued 911 access to the elderly, so it can get out of DSL markets it doesn’t want to upgrade.

But AT&T isn’t all bad, right? I mean last week we reported that the telecom giant would back down on its threats to halt fiber rollouts, that’s good, right?

Thomas Gryta with the Wall Street Journal and Brian Fung with the Washington Post say that while AT&T might have said it would pull its investments in fiber if they didn’t get more certainty from the FCC about net neutrality, what they really meant was...

The issue is complex for AT&T. As a major Internet service provider, it has a deep interest in how the Internet is governed, but the company also needs approval from the commission for its pending acquisition of satellite broadcaster DirecTV.

In other words, “We didn’t mean to ruffle any feathers before the FCC approves our merger.”

Community Broadband Communities

The Slog’s Ansel Herz is at it again. He is frustrated that Seattle has not yet invested in a municipal fiber network. The city’s chief tech officer, Michael Mattmiller says the study he’s commissioning on muni broadband will likely not be complete until April (these things cannot be completed overnight!).

The threat of competition is giving cities all over the country more power in franchise agreement talks. Bill Neilson with Broadband Reports cites Lawrence, Massachusetts; Lexington, Kentucky; and New York City for using their franchise talks to get more from incumbents, or head for the door. 

After being told for years that previous franchise agreements would magically increase local jobs and improve customer service (which never occurred on either front), some cities are now demanding guarantees in writing before agreeing to a franchise agreement. Now, some cities are also demanding that franchise agreements be reduced in years so that cities may see just how well the cable providers are acting during the agreed upon years.

Residents in Torrington, CT are one step closer to fiber in their city. The council approved using part of $1.7 million in Nutmeg Network grant money set aside to fund a fiber optic connection for community anchors. The network would run alongside its existing AT&T connection.

Alaska's Statewide Broadband Task Force is up and running. The group is committed to bringing 100 mbps speeds to every household in Alaska by 2020. Carey Restino with the Arctic Sounder has the story:

"We have reached a point in the development of modern communications wherein the Internet is firmly woven into our fabric of everyday life. America is in a race to the top in order to compete in the globalization of trade and development," the report concludes. "Alaska is part of this race. The same factors that make broadband deployment difficult in Alaska — geographic remoteness, lack of roads, high costs — also mean that Alaska, more so than other states, has the most to gain from making sure that affordable and reliable high-speed broadband is available to all its residents. Very soon, social pressure will be too great for government and civil society not to act, whether collaboratively or alone. A clear plan is in the best interest of the state."

Despite its relatively small dollar amount, communities in Minnesota are competing for the state's $20 million broadband kitty. Jenna Ross with the Star Tribune:

[Ron] Brodigan, owner of the Snowshoe Country Lodge on Sand Lake [near Two Harbors], gets Internet service with download speeds of 5 megabits per second — “almost adequate,” he said. Once the county’s fiber-to-the-premises project reaches him, he expects to pay $80 a month for 30-megabit service. “It’s going to be a boon when we get it,” he said. “But it’s been setback after setback,” he said, referring to challenges from cable companies and other delays. But, he added, “they’re really humping now.”

Chanute City Leaders Approve Financing Strategy for FTTH in Rural Kansas

Chanute's City Commission passed a motion this month to fund its planned FTTH project with revenue bonds, bringing the entire community closer to fast, affordable, reliable connectivity, reports the Chanute Tribune

In addition to authorizing a plan to secure $18.9 million in revenue bonds, the motion also included funds for a pre-deployment baseline analysis focused on economic development and funds to hire an attorney. The bonds include debt service reserve funds and additional funding to make early interest payments. The plan determines the city will pay off the investment in a little over 14 years, based on a 45 percent take rate.

The Kansas Corporation Commission (KCC) must approve the plan. The KCC is a state regulatory body with a variety of responsibilities, including regulating telecommunications utility rates. The KCC also handles rates for electricity, natural gas, and liquid pipeline services. They handle safety issues, licensing, energy conservation, etc. If the KCC does approve the plan, the bonds can be secured without a public vote unless the city receives any petitions. Chanute still plans on providing residential gig service for $40 per month.

According to the Tribune, 62 percent of 1,030 returned surveys indicated yes or maybe as to whether or not they would be interested in signing up for high-speed service at home or at work; 38 percent said no. City officials are optimistic that the project will blossom even beyond those figures:

“I think once it starts rolling out, a lot of people will see what type of services they’re getting through the city,” [Mayor Greg] Woodyard said, “and they’ll get those bundle packages and we’ll be able to offer them a better product than they’re currently getting at a cheaper price. I think more people will sign up for it in that point in time.”

Woodyard also noted that Chanute is setting an example for other Kansans suffering from poor connectivity:

“A lot of other communities are looking at starting to do this, possibly,” Woodyard said. “We are the trendsetters for the state of Kansas. Everybody’s looking at us to see how we go through the process of doing the fiber project.”

For the complete story on Chanute's network, download our 2012 report Chanute’s Gig: One Rural Kansas Community’s Tradition of Innovation Led to a Gigabit and Ubiquitous Wireless Coverage.

Chattanooga Will Ask FCC to Preempt State Barriers in Tennessee

Since January, when the DC Circuit Court of Appeals suggested the FCC has the authority to preempt state anti-muni laws, local communities have publicly supported the notion. Chattanooga's Electric Power Board (EPB) will join those communities when it petitions the FCC to preempt similar laws in Tennessee, reports The Center for Public Integrity.

Danna Bailey, vice president of corporate communication at EPB recently told The Center:

“We continue to receive requests for broadband service from nearby communities to serve them,” Bailey said. “We believe cities and counties should have the right to choose the infrastructure they need to support their economies.”

Chattanooga, one of the publicly owned networks that have inspired FCC Chairman Tom Wheeler, has proved itself as a strong economic development tool. According to the article:

A day after his meeting with Berke, Wheeler wrote in his blog, “I believe that it is in the best interests of consumers and competition that the FCC exercises its power to pre-empt state laws that ban or restrict competition from community broadband. Given the opportunity, we will do so.”

A number of other communities with municipal networks, or in the process of deploying them, have passed Resolutions that support the FCC:

In addition to communities with firsthand experience, the American Public Power Association (APPA) also passed a Resolution in June, urging Congress, the FCC, and the Obama Administration to unequivocally support:

…the ability of local governments, including public power utilities, to provide advanced communications services that meet essential community needs and promote economic development and regional and global competitiveness. 

The U.S. Conference of Mayors passed a similar Resolution at its annual meeting in June, which read:

BE IT FURTHER RESOLVED, that the US Conference of Mayors recommends that the FCC preempt state barriers to municipal broadband service as a significant limitation to competition in the provision of Internet access.

Soon after, a coalition from the National Association of Telecommunications Officers and Advisors (NATOA), the National League of Cities (NLC), and the National Association of Counties (NACo) joined together for a letter of support to Chairman Wheeler:

The importance of Internet choice at the local level has never been more important. In many places in the U.S, locally-driven projects—including innovative partnerships with private sector companies—have demonstrated that local creativity and local authority is a viable means by which new next-generation broadband infrastructure can emerge.

Fortunately, support is also coming from DC. In late June, a collection of Senate and House Members penned a letter to Chairman Wheeler, asking him to take action and begin the process. In a statement fully supported by the Institute for Local Self-Reliance, the Members wrote:

Communities are often best suited to decide for themselves if they want to invest in their own infrastructure and to choose the approach that will work best for them. In fact, it was the intent behind the Telecommunications Act of 1996 to eliminate barriers to entry into the broadband market and promote competition in order to stimulate more innovation and consumer choice. We urge you and your colleagues to utilize the full arsenal of tools Congress has enacted to promote competitive broadband service to ensure America’s communities obtain a 21st century infrastructure to succeed in today’s fiercely competitive global economy.

Local communities, regional coalitions, and federal leadership all recognize the importance of local Internet choice. The country is ready for the next step, Chairman Wheeler. We support you!

Chanute City Commission Approves FTTH Plan

Chanute City Commission decided on June 9th to take the next step to bring ftth to the community; Commissioners voted unanimously to pursue and finalize funding to deploy a municipal network.

The City's current fiber network provides connectivity to schools, hospitals, electric utility and municipal facilities, the local college, and several businesses. Chanute has worked since 1984 to incrementally grow its network with no borrowing or bonding. Plans to expand the publicly owned infrastructure to every property on the electric grid began to take shape last year.

At a work session in May, Director of Utilities Larry Gates presented several possible scenarios, associated costs, and a variety of payback periods. The favored scenario includes Internet only from the City, with video and voice to be offered by a third party via the network. Residential symmetrical gigabit service will range from $40 - $50 depending on whether or not the subscriber lives in the city limits. Commercial service will be $75 per month. Advanced metering infrastructure will also be an integral part of the network.

The Commission authorized the pursuit of up to $14 million to get the project rolling.

Plan for FTTH in Chanute Looking Positive in Kansas

Chanute has been exploring available options for a citywide FTTH network. In addition to offering residential service, city leaders want to expand the business use of its municipal fiber network. A limited number of businesses currently join schools, government, and utilities on the fiber infrastructure.

The community incrementally built a fiber network to serve government, utilities, and schools with no borrowing or bonding. The broadband utility continues to expand and uses WiMAX for public safety and to connect several businesses. For the full story of this central Kansas community, download our case study Chanute’s Gig: One Rural Kansas Community’s Tradition of Innovation Led to a Gigabit and Ubiquitous Wireless Coverage

As we reported previously, the City Council began reviewing potential scenarios to bring fiber to each premise. The Wichita Eagle reported that Utilities Director Larry Gates recently presented price and speed estimates to a City Council study session:

When complete, the city system will offer service at a speed of one gigabit per second.

City residents will pay $40 a month; it will cost $50 outside the city limits and $75 for businesses.

To put that in perspective, Chanute will offer the same ultra-fast connection speed as the Google Fiber system being rolled out across the Kansas City metropolitan area, but 42 percent cheaper than Google’s $70-a-month charge.

Or, to use another comparison, Chanute’s fiber-to-home system will be 14 times faster and cost 60 percent less than the best Internet service the town’s residents can get today.

Wow! And recall that this would not be possible if the cable lobbyists had their way earlier this year in the Kansas legislature. Kansas briefly considered making it impossible for communities to build their own networks and will likely take up the matter again next year.

We contacted Gates, who elaborated on Chanute's plan. The City will provide Internet only; a third party provider would use the network to offer voice and video. The service area will include the Utilities' three mile territory outside of the city limits.

The community is especially interested in bringing access to unserved students in the community and to patients who need access to telehealth from home. Seventeen percent of area students cannot afford or do not have access to the Internet from home. USD 413 and Neosho Memorial Regional Medical Center are each working with Chanute Utilities to develop solutions using the muncipal network.

Businesses have expressed their frustration with service from the existing cable and DSL service on many occasions. The City's network serves a limited number of commercial clients and others have asked to be connected. City Commissioner Martha McCoy is also a local business owner; she owns and operates a downtown antique and home-decor business. She told the Eagle:

“What I have today (at home), I can hardly ever get on,” she said. “And then I watch the ads they have on TV: Oh, we have super streaming and everything. It just isn’t happening here.”

The service at her business is “better, but it’s still not good,” she said. “It still knocks me off, so I still get upset with that. I have a lot of work to do and I don’t have time to wait.”

The Eagle reports that community leaders supported the initiative at the study session. The City Council formerly votes on June 9th whether to move forward.

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.

Westminster and Chanute Pass Resolutions Supporting FCC's Authority to Remove State Barriers

In light of the recent announcement, community leaders in Maryland and Kansas are rallying behind the FCC as it considers its authority under Section 706 of the 1996 Telecommunications Act. In a show of support, the Westminster Mayor and Common Council passed Resolution 14-01, a statement in support of restoring and preserving local authority to build networks. Twelve hundred miles away in Chanute, the City Commission took the same action with Resolution 2014-17.

Readers will remember Westminster as the central Maryland town that has carefully progressed forward in realizing better connectivity. The community recently approved a fiber pilot project as a way to test the water. Our contact in Westminster, Dr. Robert Wack, reported that interest in the network has blossomed even before the start of construction. The network has already attracted one new employer from New York.

Our 2012 case study, Chanute’s Gig: One Rural Kansas Community’s Tradition of Innovation Led to a Gigabit and Ubiquitous Wireless Coverage, tells the story of how the community incrementally built a world-class network. Without borrowing or bonding, Chanute's next-generation fiber network has enhanced education, economic development, and saved millions of taxpayer dollars.

This legislative session, Chanute has contended with threatening state legislation that could derail their expansion plans. The community is very close to a project that would offer fiber services to every premise in town.

Westminster Seal

Westminster's resolution, passed unanimously on February 24, reads:

RESOLUTION NO. 14-01 RESOLUTION of The Mayor and Common Council of Westminster

SUBJECT: STATEMENT IN SUPPORT OF THE FCC RESTORING AND PRESERVING LOCAL AUTHORITY TO BUILD NETWORKS

WHEREAS, the universal availability of affordable high speed Internet access for all citizens has been identified as a national priority; and

WHEREAS, community/municipal broadband networks provide an option for market competition, consumer choice, economic development, and universal, affordable Internet access; and

WHEREAS, historically, local government leaders recognize that their economic health and survival depend on connecting their communities, and they understand that it takes both private and public investment to achieve this goal; and

WHEREAS, attempts have been made at the state level to limit or stop further local government deployment of municipal Internet services through legislation, which has the potential of reducing the availability of local government to provide important information and services to their citizens in a timely, efficient, and cost effective manner; and

WHEREAS, local governments, being closest to the people are the most accountable level of government and will be held responsible for any decisions they make; and

WHEREAS, the DC Circuit Court has determined that Section 706 of the Federal Telecommunications Act of 1996 unambiguously grants authority to the Federal Communications Commission (FCC) to remove barriers that deter network infrastructure investment;

NOW, THEREFORE, BE IT RESOLVED that the City of Westminster supports FCC efforts to ensure local governments are able to invest in essential Internet infrastructure, if they so choose, without state-imposed barriers to discourage such an approach.

Local Authority

Chanute's resolution was very similar with special attention focused on local authority:

Preserving Local Control and Restoring Community Determination for Broadband Deployment

WHEREAS, local governments, being closest to the people are the most accountable level of government and will be held responsible for any decisions they make; and

WHEREAS, community/municipal broadband networks provide opportunities to improve and encourage innovation, education, health care, economic development, and affordable Internet access; and

WHEREAS, historically, the City of Chanute, has ensured access to essential services by providing those services that were not offered by the private sector at a reasonable and competitive cost. Chanute’s infrastructure investments have included electricity production and distribution, gas distribution, water treatment and distribution, wastewater collection and treatment, sanitation and landfill, streets, parks, and other vital community services; and

WHEREAS, local government leaders recognize that their economic health and survival depend on connecting their communities, and they understand that it takes both private and public investment to achieve this goal; and

WHEREAS, the universal availability of affordable, high speed internet access for all citizens has been identified as a national priority; and

WHEREAS, attempts have been made at the state level to limit or stop further local government deployment of municipal Internet services through legislation, which has the potential of reducing the ability of local government to provide important services to their citizens in a timely, efficient, and cost effective manner; and

WHEREAS, the DC Circuit Court has determined that Section 706 of the Federal Telecommunications Act of 1996 unambiguously grants authority to the Federal Communications Commission (FCC) to remove barriers that deter network infrastructure investment;

NOW, THEREFORE, BE IT RESOLVED that the City Commission of the City of Chanute, Kansas, supports FCC efforts to ensure local governments are able to invest in essential telecommunications infrastructure, if they so choose, without state-imposed barriers to discourage such an approach.

ADOPTED by the Governing Body on February 24, 2014.

Communities know their futures depend on the ability to bring fast, affordable, reliable access into their community. Because local leaders recognize that large corporate providers seldom build past low hanging fruit, a growing number now invest in their own infrastructure.

Kansas Community Benefits from Community Owned Networks

Even though the Kansas cable lobby have temporarily retracted their competition-killing telecom bill, we still want to highlight the benefits of preserving full home rule, local authority by focusing on a number of communities, including Chanute, Ottawa, and Erie.

Chanute

We have reported on Chanute's municipal network for years. The community leveraged its electric utility assets and incrementally built an extensive publicly owned gigabit fiber network. Over several decades, the community expanded its network to serve schools, libraries, local government, and businesses. Chanute took advantage of every opportunity and created a valuable asset with no borrowing or bonding.

Several business, including Spirit AeroSystems, chose to locate in Chanute because of its incredible fiber network. Spirit brought approximately 150 new jobs. The network also retained jobs when incumbents refused to provide needed upgrades to local businesses. Rather than leave town, the businesses connected to the City's network and increased their productivity. 

Former City Manager J.D. Lester referred to municipal broadband as “the great equalizer for Rural America,” saying: “You don’t have to live in Kansas City to work there.” (See our case study Chanute's Gig: One Rural Kansas Community's Tradition of Innovation Led to A Gigabit and Ubiquitous Wireless Coverage [PDF])

Kids in Chanute have access to connectivity other schools can only dream about. The local community college has expanded its distance learning program with higher capacity broadband. Free Wi-Fi hotspots are all over town; money otherwise sent to distant providers stays in the community. Chanute has invested in a WiMAX wireless system that serves public safety all over the region, not only in town. Their other utilities use the network for automatic metering and SCADA applications, saving energy and allowing customers the chance to reduce utility bills.

Chanute Logo

In addition to savings public dollars by reducing the cost of municipal connectivity, the broadband utility generates $600,000 and contributes 5 percent of that to the general fund.

Community leaders recently began planning for a FTTH expansion to bring fiber Internet to every home in town. If SB 304 finds its way into the books, those plans will be derailed and residents will be left with slow cable and DSL access.

Erie

Erie, southeast of Chanute, also utilizes Chanute's extensive fiber network for affordable school connectivity. When it was time to upgrade, Erie approached incumbent Cox. Cox's proposal for 100 Mbps to the high school alone was $5,000 per month. With its microwave network, Chanute is able to provide Internet service to the Erie community where already fiber connects the school facilities. Chanute serves Erie's high school, grade school, administration offices, and the bus barn where students learn auto mechanics. Like Chanute schools, Erie is guaranteed 100 Mbps but able to burst up to 300 Mbps when capacity allows. Erie pays only $5,100 per month and 80% of its connectivity fee is reimbursed by the federal E-rate program.

Ottawa

Inspired by Chanute's success, nearby Ottawa launched its fiber network in 2013. Ottawa joined forces with its school district and county government. Ottawa used an existing patchwork school district and county fiber, linking them together as a community network backbone. Each entity retained ownership of their resources but shared fiber strands with the City.

Ottawa businesses were dissatified with services from incumbents who were not interested in upgrading. Choices were expensive and slow T1s or an uber expensive DS3. Multiple appeals to incumbent AT&T yielded no results.

Schools, the area community college, and a farmers' cooperative connect to the network for better capacity and lower prices than AT&T will offer. The school district has cut its connectivity fees in half from $6,000 per month to $3,000 per month, by switching to Ottawa as a service provider. They now receive double the speed they used to purchase because the community network takes a much different approach than AT&T. From our April 2013 article on Ottawa:

Ottawa followed Chanute's example by providing a floor instead of a ceiling as the foundation for service. In other words, customers contract for minimum capacity but are allowed to burst to whatever capacity is available at any given time. For example, the School District will soon connect with a minimum 250 Mbps with the ability to burst to 500 Mbps.