For some five years now, many have been talking about gigabit Internet access speeds. After arguing for years that no one needed higher capacity connections, Comcast has finally unveiled its new fiber optic option. And as Tech Dirt notes, it is marketed as being twice as fast but costs 4x as much (even more in the first year!).
We decided to compare the Comcast offering to muni fiber gigabit options.
Athens, Tennessee, has struck a deal with Chattanooga's EPB and the Volunteer Energy Cooperative (VEC) that could facilitate the city's interest in a municipal fiber network. According to the Times Free Press, the Athens Utility Board (AUB) hammered out the final agreement earlier this month.
AUB is leasing fiber from VEC that carries a gigabit signal from EBP to the AUB system.
According to the article, AUB has explored the prospect of developing their own fiber network as early as November 2013 and now offers Internet access to one business in a local business park. AUB General Manager Eric Newberry told the AUB Board that they plan to approach other local businesses to set up additional commercial accounts. They plan a slow buildout and urge local businesses, many of them clamoring for a reliable connection, to be patient as they take next steps.
Athens is part of the Chattanooga-Cleveland-Dalton area in the southeast corner of the state and home to around 13,500 people. In March, the City Council voted unanimously to pass Resolution 2015-11 supporting local authority for telecommunications. [See the PDF of the Minutes p.1]
Thusfar, the investment has cost $58,258.69 for labor, materials, and equipment. The Board had budgeted $100,000 for the project.
For the first time in four years, EPB is asking its board of directors to approve a rate increase for electric power charges, reports the Chattanoogan. According to EPB, revenue from the Fiber Optic division has kept electric power prices in check for the past four years.
Price increases are always a frustration for residents and businesses, but this is actually another example of how the entire community, even those who may not subscribe to EPB's fiber network, have beneifted via reduced energy rates. We wrote about this last in 2012.
According to the article, several years of deadly storms have caused damage that have increased the average cost of cleanup from $2 million per year to $6 million per year. Additionally:
Officials said this rate increase "is driven by a continuing trend over several years of higher-than-normal costs associated with the greater frequency of devastating storms and by large peak energy demand charges that EPB pays to TVA for power generation. These demand charges are not covered by regular power sales during months with extreme fluctuations in temperature, particularly when there are a few days of extreme temperatures and the rest of the month is much milder."
The article also notes that the fiber optic division has made $13.4 million over the past fiscal year. Debt from the investment made to offer telephone services is expected to be paid off this June.
[EPB CEO Harold] DePriest said it was "the best investment we ever made."
In an effort to extend the benefits of its gigabit network to lower income Chattanooga school kids, Mayor Andy Berke announced that the EPB will soon offer the "Netbridge Student Program."
WDEF reports that children will qualify for the program if they are enrolled in Hamilton County schools and are currently enrolled in the free or reduced price lunch program. Comcast's Internet Essentials uses the same eligibility criteria. Households that qualify will be able to sign up for 100 Mbps service for $26.99 per month. Details are still being discussed.
Last year, Hamilton County schools replaced a number of textbooks with iPads in an attempt to take advantage of Chattanooga's fiber asset to improve student performance. The move revealed a grim reality - that many students' access to that incredible gigabit network (or any network) stopped when they walked out of the school. Educators found that children with Internet access at home made significant strides while those without fell behind. From a December 2014 article on Internet and Chattanooga students:
In the downtown area, for example, only 7 percent of potential customers subscribe to high-speed broadband Internet. In economically depressed areas such as Alton Park and East Lake, only 15 percent of residents have high-speed Internet, according to EPB.
We spoke with Danna Bailey, Vice President of Corporate Communications from EPB, to get some details on the plan and she confirmed that the program is still in its infancy; officials at EPB plan to have it ready for students by the fall. She told is that the rate of $26.99 is what EPB must pay to bring 100 Mbps to a customer when it is unbundled. The regular rate is $57.99.
Note that the slowest speed anyone can get on the EPB Fiber network is 100 Mbps symmetrical. Unlike other providers, EPB is not offering a much slower tier to low income households. We haven't been able to verify, but we suspect that EPB is limited by state law on its pricing. State laws that prohibit municipalities from offering services below cost may be uniquely hurting low income households -- yet another reason that states should allow communities to make these decisions locally.
We were curious about how EPB plans to contend with the high incidence of mobility among lower income families, which often complicates their ability to qualify for Internet Essentials from Comcast. EPB acknowledges that this may become an issue, but because they are so entrenched in the community and serve so a large segment of housing, Danna does not believe it will be a difficult problem to overcome.
They are also determined to avoid the enrollment pitfalls of Internet Essentials because, according to Danna, it defeats the purpose when people who need the program cannot enroll. It is also undecided at this point whether or not the program will be extended to other low-income households, such as the elderly or adults without children.
We applaud any community's attempt to provide fast, affordable, reliable Internet access to their less advantaged citizens. The program is new, but we hope that EPB will consider this sort of program for all those that need affordable access, rather than just a small segment. We want to see capable communities address the digital divide with force and conviction.
In a recent report, WBIR Knoxville shined the spotlight on Morristown. The article and video discuss how FiberNET has improved its telecommunications landscape by inspiring competition, offered better connectivity to the region, and how state law prevents other towns from reaping similar benefits. We encourage you to watch both of the videos below.
Morristown's utility head describes how it considers high-speed Internet access to be a necessary utility:
"You had railroads, you had interstates, and this is the new infrastructure cities need to have," said Jody Wigington, CEO of Morristown Utility Systems (MUS). "To us, this really is as essential to economic development as having electricity or water."
Morristown began offering gigabit service via its FTTH network in 2012. It began serving residents and businesses in 2006 because the community was fed up with poor service from incumbents. Since then, FiberNET has stimulated economic development, saved public dollars, and boosted competition from private providers.
Prices for Internet access are considerably lower in Morristown than similar communities. From the article:
Morristown's Internet service is more expensive than Chattanooga, but much faster than the rest of the region at a comparable price. A 100 Mbps synchronous connection is $75 per month. Advertised rates for Comcast in Knoxville show a price of almost $80 per month for a 50 Mbps connection with much slower upload speeds. A 50 Mbps connection in Morristown costs $40 per month. The cable Internet option in Morristown is Charter, with an advertised price of 35 Mbps for $40 a month.
As we have seen time and again, the presence of a municipal network (nay, just the rumor of one!) inspires private providers to improve their services. AT&T offers gigabit service in Morristown and Comcast has announced it plans on offering 2 gigabit service in Chattanooga.
"Without a major disruptor like we've seen in Chattanooga and in Morristown, there's really no reason for these guys [private companies] to go out of their way to make a big spend to make bandwidth faster. It just simply doesn't make good business sense," said [Dan] Thompson, [senior analyst for Claris Networks].
Thompson said he does not believe there should be any concern that municipal Internet would result in a monopoly akin to other utilities.
"If you go to Chattanooga, Comcast advertises like crazy on billboards down there. You don't see that here [in Knoxville] at all. Comcast is still there. AT&T is still there. They're still viable options."
Beyond offering better service to residents, FiberNET also attracts more employers. In 2013, we reported on 228 new jobs in the community, attracted here in part because of FiberNET's reliability. Most recently:
"There is a new call center that is looking at relocating to Morristown. They told us the local provider can get them fiber in the building for around $1,000. The guy from our utility company told him we've already got fiber to your front door and we'll put it in the building for free because you're going to be helping our economy and jobs. Their jaws drop. Businesses really are shocked by what we have here," said [President of the Morristown Chamber of Commerce Marshall] Ramsey. "They looked at Blount County and looked at Knoxville, but the confidence in the networks just isn't there right now."
Even though the FCC struck down state restrictions on municipal networks in Tennessee, local communities are not rushing to deploy their own networks. The state is challenging the federal action, and no local community has announced an expansion due to the uncertainty around the appeal. With this appeal, the state of Tennessee is wasting taxpayer dollars to deliberately slow the deployment of essential infrastructure in rural communities.
As Wigington acknowledges in the story, a municipal fiber network is no small endeavor. Nevertheless, only a local community can know if it has the ability, drive, and need to venture into Internet access as a utility.
Wigington said the decision of whether to compete with private industry should ultimately be made by the cities, not made for them by the legislature or the cable companies.
Senator Janice Bowling and Representative Kevin Brooks have decided to table their legislative efforts to remove state restrictions in Tennessee. While backing for SB 1134 and HB 1303 was growing beyond the walls of the state Capitol, the sponsors decided to shore up stronger legislative support rather than risk derailing the bill entirely.
"We have had a lot of good progress, and we don't want to throw it all away," Brooks said. The votes were not there in the Senate, and he and co-sponsor state Sen. Janice Bowling, R-Tullahoma, have asked to roll the bill to the beginning of the 2016 calendar, giving them more time to garner support from their colleagues.
"We have pressed the pause button to keep it alive," Brooks said.
Energized by the recent FCC decision nullifying state laws restricting Chattanooga from expanding, Bowling, Brooks, and other local leaders thought the time was right to once again try to eliminate state barriers. The FCC decision has already been formerly challenged by Tennessee's Attorney General with the support of the Governor. Rather than depend on federal intervention to establish an environment that will encourage connectivity, SB 1134 and/or its companion HB 1303 would have solved the problem on the home front.
Economic development has been stifled by state barriers preventing municipal network expansions in the state but many constituents are plagued by lack of personal access. Incumbents who have spent millions lobbying to keep these restrictions in place during past legislative sessions, do not serve a number of rural areas. Those areas could benefit from municipal network expansions. From a March 6th Tennessean article:
"My district said we need help. We have some folks with little service, some folks with no service," Brooks said. "This is not about government intrusion; this is a bill about service exclusion."
Even though the legislation will not change state law this session, the FCC decision still stands for now. It may take years for the issue to be finally determined but hopefully the momentum will continue and more Tennessee voters will let their elected officials know they want to strike anti-muni laws from state books.
From an EPB Press Release:
“Thanks to a growing number of Tennesseans, who are contacting their representatives to communicate their critical need for broadband services, we made more progress this legislative session than ever before,” Senator Bowling said. “Next year, I hope the needs of the hundreds of thousands of Tennesseans with little or no broadband service will override the vested interests of the legacy carriers who refuse to serve them while lobbying to prevent community-based providers from meeting the needs of the people in our state.”
We simply find it stunning that a majority of legislators in Nashville believe that their state is better off with slower Internet access. That is exactly what this is about - AT&T and Comcast have purchased another year of not having to worry about competition from the Tennessee General Assembly.
A year ago, the FCC accepted applications from entities seeking Connect America funds for rural broadband experiments. After provisional awards and some eliminations, Chanute's FTTH project, Chattanooga's EPB, and a number of additional cooperatives are now on the list of provisional winners reports Telecompetitor.
According to the article, $27 million became available when 16 entities were eliminated for various reasons.
A recent Chanute Tribune article reports that the city's expected award will be approximately $508,000 if it passes the FCC's post-selection process. Mikel Kline, a consultant working closely with the city on its FTTH project told the Tribune:
It is Kline’s understanding that this $508,467 would be cost support for the city’s Fiber to the Home network over the next six years. It requires the city to become an eligible telecommunications carrier, and to finance and construct the fiber network.
This money can be used to pay operational costs or offset a portion of the debt on the city’s investment in the local infrastructure over the next six years.
Remember that Chanute has developed its fiber infrastructure incrementally over more than two decades. The community is moving ahead with its FTTH project to share the benefits of fiber with residents and more businesses after bringing better connectivity to schools, municipal facilities, and a growing number of businesses.
Recently, the city applied for and received state approval to bond for deployment costs. A 1947 state law required the application be filed with the Kansas Corporation Commission, the state entity concerned with utility regulations. According to Kline, the city has also applied for eligible telecommunications carrier (ETC) status. This designation will allow the city, as a common telecommunications carrier, to obtain Kansas Universal Services Funds.
Read more about their accomplishments in our 2013 case study. We also interviewed Larry Gates and J.D. Lester from Chanute about the network in episode 16 of the Community Broadband Bits podcast.
The State of Tennessee has filed the first appeal to the recent FCC Opinion and Order [PDF] reducing state barriers to municipal broadband. Governor Bill Haslam appears determined to keep his constituents in the Internet slow lane.
The State of Tennessee, as a sovereign and a party to the proceeding below, is aggrieved and seeks relief on the grounds that the Order: (1) is contrary to the United States Constitution; (2) is in excess of the Commission’s authority; (3) is arbitrary, capricious, and an abuse of discretion within the meaning of the Administrative Procedure Act; and (4) is otherwise contrary to law.
Haslam expressed his intention to explore the possibility of filing the appeal earlier this month reported the Times Free Press. In February, the Governor and Tennessee Attorney General Herbert Slatery signed a letter from a number of state officials to the FCC urging them not to change state law. U.S. Rep from Tennessee Marsha Blackburn and her Senate counterpart Thom Tillis introduced legislation to fight the Order just days after the FCC decision.
State Senator Janice Bowling, a long time advocate for local choice, and Rep. Kevin Brooks have taken the opposite perspective, introducing state legislation to remove restrictions to achieve the same result as the FCC Order with no federal intervention. Their bill has been publicly supported by the state Farm Bureau and local municipalities such as the City of Bristol.
Hopefully, at the next election Tennessee voters will remember how their state elected officials and their Governor stand on improving connectivity in the Volunteer State. The good folks at Tech Dirt expressed a similar sentiment:
But here's the larger question: if you're a resident of Tennessee who likes having fast, affordable, competitive broadband, are you happy about your tax dollars being used to sue the FCC in an effort to uphold a law written by the big broadband players, focused on blocking such competition? It seems like the current Tennessee Attorney General, Herbert Slatery, has painted a giant target on his back for a challenger who actually wants to support the public in Tennessee.
Do not be fooled — this debate is not between “purely” private companies and municipal governments; it is between heavily-subsidized beneficiaries of governmental handouts on one side and locally-elected and openly accountable public servants on the other.