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Arkansas Town Targeted by Cox Prior to Community Broadband Referendum

Thu, April 05, 2012 | Posted by christopher

Siloam Springs, sporting 15,000 people in the northwestern corner of Arkansas, could be the next community to build its own community fiber network. But first they have to pass a referendum in May in the face of stiff opposition from Cox Cable, which would prefer not to face real competition.

For over 100 years, the city has provided its own electricity via its electrical department. Now, it wants to join the more than 150 other communities that have done so. After last year's changes to Arkansas law, Siloam Springs has the authority to move forward if it so chooses.

Pamela Hill at the City Wire has covered the situation with a series of stories, starting with an explanation of why they are moving forward:

David Cameron, city administrator, said the proposal is not so much about dissatisfaction with current providers as it is about finding new revenue for the city. Cameron said revenue from electric services has been a key source of funding for various projects and necessities for the city. That “enterprise” fund is getting smaller, Cameron said, and an alternative funding source is needed.

“We have done a good job managing accounts, building a reserve,” Cameron said. “We want to keep building on the programs we have. It takes money and funds to do that.”

City officials discussed the issue for the last 18 months and decided to put it to a referendum. Voters will decide the issue May 22.

That is a fairly unique reason. Most communities want to build these networks to encourage economic development and other indirect benefits to the community. Given the challenge of building and operating networks, few set a primary goal of boosting city revenue.

Map of Siloam Springs

If approved by voters, the city plans to spend $8.3 million to install 100 miles of fiber optic cable directly to homes and businesses. The city should be able to repay the debt in 12 years, if things go according to a feasibility study presented to the city’s board of directors in January. Cameron said projections show the system could begin making a profit after three years.

Just as in Longmont, Colorado, the incumbent cable company has created a fly-by-night astroturf group to oppose Siloam Spring's initiative. In Longmont, the group predictably disappeared shortly after Comcast lost the referendum.

In the Longmont referendum, the opposition came out of Denver. To fight the community in Siloam Springs, Cox is funding a group out of Little Rock that calls itself Arkansans for Limited Government. (If the only threat to my monopoly were a local government, I suppose I would want to limit it also.) Though CenturyLink ostensibly competes with Cox, its DSL cannot offer the same capacity as cable networks (the problem we call a Looming Monopoly).

After the approach was announced, the usual public v. private rhetoric emerged. Among others, the head of the of Arkansas Chamber of Commerce is defending Cox, probably a significant member of that Chamber:

“Make no mistake, when government competes with private business it always has an unfair advantage, and it will stifle economic growth and competition in the Siloam Springs market,” Zook wrote.

And so we see the same false claims we have previously debunked. And right next to claims that the public sector has all the advantages and will crush the private sector, we find a paradoxical claim:

Zook said there are many instances across the country where cities have tried this and failed.

The reality is that Cox and CenturyLink have all the advantages AND that communities generally succeed in creating signficant community benefits by building their own networks. They get real competition, lower prices, more investment, and a better climate for local businesses to succeed.

Another article was dedicated entirely to arguments against the community effort (as though every other article did not devote enough time to these pro-Cox arguments).

Cox Logo

In it, a manager for CenturyLink claimed that they would be in favor of a public/private partnership but Cox quickly rejected the idea:

In a public-private partnership, a city pays a certain percentage of costs for new or upgraded services and an established private company does the work and provides the service.

...

Pitcock said Cox Communications has never taken public monies for joint ventures, and probably wouldn’t take part in a public-private venture in Siloam Springs.

If CenturyLink wants a public/private partnership, it should join UTOPIA to offer real services to Utah residents and businesses rather than its patheticly slow DSL.

Following one of several community meetings to discuss the project, reaction to the initiative seemed mixed, with many people wanting more information.

At the meeting, the assistant city director of Sallisaw, which operates a muni FTTH network in Oklahoma, spoke about their experience.

Skelton talked about the success of the Sallisaw system, noting that 99 out of 100 test customers stayed with the city’s service after the trial period in 2005 and said the city should make a profit by the end of the year. Customer bills average $103, he said.

Sallisaw Logo

However, Sallisaw had fewer options for broadband when they started. By contrast, Cox has proved willing to get very dirty in its opposition to new competition, as seen in Lafayette (see the last paragraph of this story).

The most recent story from the City Wire discusses other muni broadband networks in Arkansas.

Conway in central Arkansas and Paragould in the northeast corner have had city-owned cable services since 1980 and 1990, respectively. They’ve continued to upgrade and add services as times and technologies changed. Officials for both systems say they operate at a profit.

Chelan PUD Asks the People What the Future Holds for Their Fiber-Optic Network

Wed, March 14, 2012 | Posted by lgonzalez

Chelan PUD is asking the people of their rural community whether they “love” or “just like” their beleaguered and pioneering fiber-optic network. At a series of public input meetings to be held across the county over the next month, residents will have the chance to hear opinions from business, economic, and marketing consultants, as well as express their devotion, or lack thereof, to the network. The future of the network is in question and the Chelan PUD needs to hear from its owners.

At the first meeting, on February 28th, most residents of Chelan County said that having a locally owned and controlled network available to them was a priority. Consultants hired by the PUD said the fiber-optic network could be self-sustaining in the long term with changes in business planning. Recommendations included writing off internal debt, more aggressive marketing efforts to existing and ready locations, and collaborating with ISPs to obtain more subscribers in the open access network. Yes, the PUD Fiber-optic network has had its problems, including high installation costs due to the landscape and lack of conduit, changes in PUD leadership, and incompatible existing residential technology. Nevertheless, experts and the local community appear patient and cautiously optimistic. More meetings will follow; the next is scheduled for March 19th.

Providers lease from the PUD (state law prohibits them from competing directly with retail services) and proceeds from wholesale electricity sales have allowed the network to continue expanding. As we have reported in the past, the PUD is an open access network and while it has not been able to pay down its debt, and has had some difficulties, the PUD network has recognized value in the community, as evidenced at this first meeting. It certainly beats not having access to the essential infrastructure necessary to succeed in the modern economy.

John Tomkins, a Plain resident wants fiber, if it comes to his area. “Business is going to go where they can get a high-speed network. Let’s give our county the opportunity to grow.”

Chelan PUD is finding creative ways to capitalize on their community investment. Most recently, with an agreement with local NoaNet to string fiber between four Verizon cell phone towers and to the PUD’s network. The PUD will own the network, designed to increase “4G” network speeds. Some question whether or not the PUD may be taking a gamble at losing some fiber-optics subscribers to the increased wireless capacity. Possibly, but the Chelan PUD knows that local customers like their speed and indications are that the 4G service would be significantly more expensive than services from the publicly owned network and would involve severe data caps from Verizon.

We encourage others to take a look at Chelan, where the community is having an adult conversation about what infrastructure they need to thrive and how they should go about building it. They know the value of self-determination and its value beyond a simple profit/loss statement.

In Minnesota, Rural Fiber to the Farm Project Expands

Fri, January 27, 2012 | Posted by christopher

A rural Fiber-to-the-Farm project that started in Sibley County has added three new towns to its potential territory due to the extremely high interest in fast, affordable, and reliable connections to the Internet. The current providers aren't getting the job done and few expect that to change given the cost of improving services.

An article last year reported on present difficulties for many in Sibley:

Soeffker, who farms with her husband in rural Sibley County, said the dish receiver they must use works fine in good weather but balks during heavy rain and snowstorms.

Meantime, her husband struggles with a lagging Internet speed of .6 megabits a second that falls short of meeting his business needs when he’s selling commodities.

The committee organizing the network set a goal for demonstrating the interest of something like 50% of the population in the target area. There has been some confusion as to exactly how many they should have before committing to the project but with just two mass mailings, they have received nearly 3,000 positive responses (of the over 8000 households that could be served). This is a very strong response.

To keep the public informed, they have had numerous public meetings in each of the communities that will be involved. To be as open as possible, they would often have three meetings in a town per day -- a morning, afternoon, and evening meeting to accomodate everyone's schedule. As this project moves forward, no one can claim the group has been anything but open with the plan.

On January 19, they had a major meeting with over 100 people attending, including many elected officials from the towns. For over two and a half hours, they had five presentations and numerous questions. MPR's Jennifer Vogel was there and wrote about the project shortly afterward.

Participating communities--which include Renville County, Sibley County, Fairfax, Gibbon, Winthrop, Gaylord, Arlington, New Auburn, Green Isle, Buffalo Lake, Steward, Brownton and Lafayette--have been asked to decide by early March whether to continue with the project and release additional funds for marketing and administration.

Previously, the project included 7 potential towns. But some nearby towns in Nicollet County have expressed interest in joining and their density would make the project more viable. Most in Sibley have been dedicated to serving every household - town and farm alike. While the principle of equity is noble, it ultimately makes the project harder to finance due to the higher fixed costs required to serve the least dense areas. Bringing in a few more towns benefits everyone.

Unfortunately, the people around the those towns are frustrated that they are not slated for connections in the current plan -- see some of the discussions on their vibrant facebook page. They will have to draw the line somewhere but will undoubtedly be interested in expanding the network once they have built out in initial territory.

Minnesota law has a barrier to municipal networks and as a matter of law, it is not clear that it applies to a county-owned project. Under law, if a municipality wishes to own or operate a telephone exchance, it must have a successful 65% referendum -- an incredibly high bar given the imbalance of spending power in such contests. Incumbent providers can spend a lot to oppose a referendum whereas local governments cannot take a position and grassroots groups are limited in their financial resources.

Renville Sibley Fiber Network

However, as this network plans to neither own nor operate a telephone exchange, it should not have to pass a referendum. It seems as though the project is leaning toward a partnership with Hiawatha Broadband Communications, a well liked private firm from southeastern Minnesota. HBC already operates the muni-owned Monticello FTTH network.

While no financial plans are yet finalized, the most likely option appears to be non-recourse revenue bonds for nearly $70 million. These are bonds that are issued to private investors and will be repaid with revenues from the subscribers. If the network were to fail to produce enough revenue to make the debt payments, the towns and county would have the option of making up the difference from tax revenues but would be under no obligation to do so.

From Jennifer Vogel:

There would be some public obligation to the project, in the form of what McGinley called a "debt service reserve fund." In order to make the project appealing to investors, he said, the participating communities would be required to establish and replenish if necessary a $4.5 million rainy day fund that would cover any shortfalls. They also would have to cover the contributions of any communities that ducked out of the project down the road or couldn't pay into the fund.

If one town, Winthrop for example, decided not to ante up for the debt service reserve fund, other communities could cover the difference. As the network generates net income (perhaps 5-6 years down the road), the money comes back proportionally to those towns that created the reserve fund.

It bears noting that these people are not asking for any handouts. Whereas Frontier and other providers in the towns are incredibly unlikely to expand their networks absent taxpayer subsidies, the Sibley County Fiber Project will be locally self-reliant.

Tullahoma Utilities Start Smart Meter Meetings

Thu, December 15, 2011 | Posted by christopher

Tullahoma, home to the LightTUBe FTTH network of Tennessee, is starting to roll out smart meters for its electrical and water utilities (owned by the city). They have initiated a series of public meetings to discuss the AMI - Advanced Metering Infrastructure. From a recent press release:

“The meetings are designed to answer any questions the Tullahoma community has about the AMI technology”, said Ernie Hobbs, Communications and Marketing Specialist for TUB. “We want to assure the community that automated meter reading is the next step in providing exceptional customer service. AMI is a step forward for Tullahoma, and it will provide additional opportunities for our customers by allowing them to monitor their own usage of utilities.”

The AMI installation is a replacement of current water and electric meters. The
new meters can transmit usage data through TUB’s secure fiber network. The infrastructure upgrade has been in the planning stage for several years. However, with Tennessee Valley Authority (TVA) moving to Time Of Use (TOU) rates, TUB decided it was time to begin the AMI project to align with the TVA rate change.

A recent newsletter from the utility explains further, noting that the Tennessee Valley Authority (a federal agency that produces the power used by Tullahoma and many other public utilities) is going to start charging time-of-use rates starting in fall of 2013. This is because electricity is more expensive to produce and distribute based on the amount being used - time of use pricing will encourage people to use more power when it is cheaper to produce and less when it is expensive.

This time-of-use pricing is one component of a "smart-grid." Unfortunately, some investor-owned utilities have used time-of-use pricing to increase their revenues without substantially benefiting ratepayers -- which is one reason many are suspicious of the entire concept. Hence the public meetings.

Because Tullahoma has its publicly owned network already connecting much of the community, it is better positioned to deal with TVA's changing rates than other communities.

Longmont Chooses Local Self-Reliance

Wed, November 02, 2011 | Posted by christopher

What a difference two years and a strong grassroots campaign makes. Two years ago, Comcast's ability to spend $245,000 on a campaign of lies was the determining factor over Longmont's decision about using publicly owned infrastructure to expand broadband competition.

Yesterday, despite Comcast spending even more by again funneling hundreds of thousands through the Colorado Cable Telecommunications Commission, voters overwhelmingly supported question 2A - reinstating local government authority to offer telecommunications services using its infrastructure.

Full congratulations must go to the Longmont citizens who organized a truly grassroots campaign that sent people out on the streets with signs, organized informational events, disseminated press releases, maintained an information web page (and Facebook page), wrote letters to the editor, commented on online news stories, and otherwise educated their peers about the opportunity 2A offered. Craig Settles is also celebrating with a post describing the victory.

Once again, the question was:

Without increasing taxes, shall the citizens of the City of Longmont, Colorado, re-establish their City's right to provide all services restricted since 2005 by Title 29, article 27 of the Colorado Revised Statutes, described as "advanced services," "telecommunications services" and "cable television services," including any new and improved high bandwidth services based on future technologies, utilizing community owned infrastructure including but not limited to the existing fiber optic network, either directly or indirectly with public or private sector partners, to potential subscribers that may include telecommunications service providers, residential or commercial users within the City and the service area of the City's electric utility enterprise?

Question 2A results

The results were 60.8% Yes, 39.2% No. 13,238 voted yes whereas 8,529 voted against.

The Times-Call has already posted a story about the results, including some curious points from the pro-Comcast group's spokesman (and Denver resident) George Merritt.

"While we remain concerned about the disappointing track record of municipal telecoms, we hope our city has learned from the mistakes made by other cities and that taxpayers are protected with whatever venture develops as a result of the passage of Question 2A," Merritt said.

Despite spending probably over $300,000 (we won't know for a few days), Comcast and allies couldn't even find a Longmont resident to be their spokesperson!!

Practically no one in Longmont supported Comcast's position, as we noted yesterday - everyone campaigning for office supported reinstating local authority to provide broadband services. The newspapers supported the effort. In debates, the only people willing to defend Comcast's position were from out of town.

For just about everyone, this was a no-brainer: The City should be free to use assets it built long ago to expand economic development and broadband access. And yet, Comcast's $300,000 still got 39% to support letting City assets go unused while local businesses and residents are overpaying Comcast and CenturyLink for those services.

One of the most unique ways Longmont's elected leaders discussed this issue occurred during a City Council meeting. During that meeting, each official approached the podium and made a public comment about why they supported the 2A initiative. Unfortunately, we have not been able to locate video or audio, but the idea may inspire other communities as they seek to educate the community about the benefits of local, community ownership.

In other good news, nearby Boulder also embraced local self-reliance by narrowly voting to consider municipalization of the electrical grid. Xcel Energy spent close to a million dollars in a similar scare-campaign to Comcast in Longmont but Boulder voters decided to trust their local government more than a distant mega-corporations. Progress.

Link: 
Stop the Cap on Longmont's Victory
Link: 
Broadband Reports on Longmont's Vote
Link: 
Google may, or may not, have Congratulated Longmont