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New York Times Covers Fiber and Economic Development

In a recent New York Times article, reporter Kate Murphy shined a light on fiber's increasing role in economic development. Murphy discussed several of the same networks we have followed: Wilson, NC; Chattanooga, TN; Lafayette, LA; and Mount Vernon, WA.

Murphy acknowledged that successful companies are moving from major metropolitan areas to less populated communities out of necessity:

These digital carpetbaggers aren’t just leaving behind jittery Netflix streams and aggravating waits for Twitter feeds to refresh. They are positioning themselves to be more globally competitive and connected.

Murphy notes that countries where governments have invested in critical infrastructure offer more choice, better services, and lower rates. She also points to successful local initiatives, often in less populated communities where large private interests have not invested:

Stepping into the void have been a smattering of municipalities that have public rather than private utility infrastructures. Muninetworks.org has a map that pinpoints many of these communities. They are primarily rural towns that were ignored when the nation’s electrical infrastructure was installed 100 years ago and had to build their own.

Murphy spoke with several business owners that moved from large metropolitan areas to smaller communities because they needed fiber. For a growing number of establishments, fiber networks are the only kind that offer the capacity needed for day-to-day operations. Information security firm, Blank Law and Technology, moved to Mount Vernon to take advantage of its open access fiber network. It helps when customer service representatives live in your neighborhood:

“We investigate computer malfeasance and have to sift through terabytes of data for a single case,” Mr. Blank said. “The fiber connection is the only reason we are in Mount Vernon and the customer service isn’t bad because all you have to do is walk down the street and knock on the door at City Hall.”

MassBroadband 123 Complete in Massachusetts

The Massachusetts Broadband Institute (MBI) just announced that the 1,200-mile fiber network MassBroadband 123 is now complete.

According to the official announcement, the middle-mile network will eventually serve over 1,200 community anchor institutions. The open access network, constructed with $45.4 million in stimulus funding and an additional $40 million in state bond proceeds, lit up in March 2013. Schools, hospitals, and municipal government are some of the entities already connected.

Communities with a history of little or no middle-mile options will now have some level of connectivity via MassBroadband 123. The Commonwealth hopes to attract last-mile providers to connect homes and businesses, something we have yet to see succeed. We are afraid a more likely scenario will be a few providers seeking to connect the highest revenue customers with no intention to connect everyone, an outcome that would perversely make it more expensive to build financially sustainable networks in these areas.

A few places, like Leverett and Princeton, plan to invest in their own publicly owned infrastructure and will have the option to connect to the outside world through MassBroadband 123. This is an excellent approach that we applaud because it leads us to universal access.

According to a Bershire Eagle article, the state legislature plans to bring more funding to the initiative for last-mile connections:

But state Rep. William "Smitty" Pignatelli, D-Lenox, pointed out in an interview that much investment is needed before individual homeowners and businesses can connect to the network.

The state Senate is poised to move on a bond bill which includes $50 million to be put toward the project's phase, Pignatelli said.

"The state has made a very big commitment in hopes that the private sector would step up," Pignatelli said. "The time is now."

In our experience, middle mile networks change the economics of the operating costs for fiber networks, not the capital costs. The high upfront capital costs are what deter investment and robust middle mile networks do little to change that reality, which is why communities are smart to step up and make the necessary investments.

Overview of Stockholm's Stokab - Community Broadband Bits Episode #88

Having just returned from a short trip to Sweden, Lisa Gonzalez and I discuss what I learned and how Stockholm has become one of the most connected cities on the planet.

We talk about how Stockholm built a massive dark fiber network that has enabled competition at the service layer, the status of telecommunications in Sweden, and what lessons we can learn in the U.S. from their experience.

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 15 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."

New Hampshire's Bill Would Allow Munis to Bond for Open Access

A recent in-depth article from the Keene Sentinel updates us on the status of New Hampshire's HB 286, which would expand bonding authority for local governments. New Hampshire law currently restricts bonding authority for Internet infrastructure to towns with no access to the Internet, but nearly all communities have at least some slow broadband access in a few pockets of town.

We have been tracking this bill, most recently four months ago just before it overwhelmingly passed the house.

Unfortunately, the bill does not give many options to local governments. It settles to only allow bonding when the local government is not providing retail services, a business model that has only worked well when local governments have expanded very slowly. That said, New Hampshire already has a promising open access network called Fast Roads that would allow nearby towns to connect and access the four service providers already using it.

Connecting to an already-operating open access network is a much better prospect than having to start one from scratch, particularly in areas with low population density. Nonetheless, we continue to find it counter-productive for state legislatures to limit how local governments can invest in essential infrastructure. We know of no good policy reason for doing so - these limitations are a result of the lobbying power of a few cable and telephone companies that want to preserve scarcity to ensure high profit margins.

Kaitlin Mulhere's article, "Broadband access could be improved in NH through new bill," demonstrates the need for better networks in the granite state and notes that Fast Roads is starting to meet those needs in the areas it operates.

People often hear, for example, that 95 percent of the state has access to broadband, she said. But that’s only by including all New Hampshire Internet speeds, some of which fall below the speed considered fast enough to be broadband, which is 4 megabits per second (Mbps). Most of the state, more than half, doesn’t have access to speeds that meet the 4 Mbps threshold, she [Carole Monroe, Executive Director of Fast Roads] said.

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So far, there are four providers on the network, which passes through 19 towns, including Fitzwilliam, Gilsum, Keene, Marlow, Richmond, Rindge and Swanzey. Now that construction is complete, FastRoads is working to add more providers to the list, as well as looking for ways to expand its network to more residential areas.

FastRoads also included two areas of “last mile” construction, enabling 1,300 residents and businesses in specific areas of Rindge and Enfield to connect directly to the FastRoads fiber, though a service provider has to bring the connection from the cable box on the street into the home.
So far, about 180 residents or businesses are using the network, Monroe said.

For Rindge resident Tim Wessels, the FastRoads network has made a “world of difference.”
Before it, he paid $130 a month for a satellite and two DSL circuits. Combining all three, he had a download speed of just over 3 megabits per second.

Now, Wessels pays $70 to one Internet service provider for 20 Mbps of download and upload speed.

Fast Roads was assisted with an award from the federal broadband stimulus programs.

Utah Senate Bill Attacking UTOPIA on the Fast Track: SB190

UPDATE: According to Pete Ashdown, the amendment has been pulled. Stay vigilant, these things rarely just go away.

We reported earlier this month that UTOPIA was once again facing legislative attack at the state level in the form of HB60. While the House has focused on other issues, the Utah Senate is launching its own attack. SB190 has also put UTOPIA in the crosshairs and events are happening quickly. Time to contact your elected officials, Utah!

According to Jesse Harris at FreeUTOPIA.org, SB190 as originally crafted, could have curtailed a pending deal between UTOPIA and Australian firm Macquierie. From Harris' February 19 story on the bill:

It appears the legislature is determined to chase off a $300M investment in our state’s broadband infrastructure to appease CenturyLink. Sen. John Valentine is running SB190 which has been very specifically crafted to prevent any UTOPIA city from using the same utility fee that Provo has to pay down the bonds. Moving to a utility fee to provide transparency on the cost of the UTOPIA bonds has been a key part of the Macquarie discussions so far, so it could very well put the deal in jeopardy.

Since its introduction, the bill was heard in the Senate Business and Labor committee. There was broad and fierce opposition and Sen. John Valentine, the sponsor of the bill, amended it. The changes made the bill palatable to Macquarie and it passed through committee to the Senate Floor on Feb. 24.

After the bill passed through the committee, Valentine introduced a floor amendment that will prevent new cities from joining the network. Harris now reports:

His floor amendment to SB190 makes it so that only current UTOPIA cities can use a utility fee to finance construction of the network. Any new cities that join would be unable to do so at all.

Why does this matter? Because Macquarie has structured the entire deal around it. If future cities can’t do it, they can’t get the same terms that Macquarie is offering UTOPIA. This could derail their rumored plans to cover the entire state in gigabit fiber with over a dozen competing providers.

The bill is now awaiting a vote on in the Senate. It is imperative that you contact the Senate, especially your own elected offical, to voice your opposition to the bill in its current form.

These types of end runs around legislative procedure are common place. In my own limited experience working at the state legislature, I have seen contentious sections of proposed bills added or removed to make a deal, only to be added or removed later on the floor and during conference commitee. In places that do not have a full time legislature, changing proposed legislation on top of a deadline is an effective way to take advantage of the clock to achieve an unpopular goal. It is important to remember that legislation is fluid until the gavel comes down sine die.

How Ammon, Idaho, Builds Digital Roads - Community Broadband Bits Episode 86

Ammon, a town of 14,000 in southeast Idaho, has been incrementally building an open access, fiber optic network that has connected community anchor institutions and is starting to become available to local businesses. Ammon Technology Director Bruce Patterson joins us to explain how the community has moved forward with its model for improving Internet access.

They first sought some stimulus support for the network but were not selected. But in the process, they had set aside the match funding and found that it would be less expensive to link municipal buildings across town with their own fiber rather than leasing from an existing firm.

It is worth emphasizing that Ammon has no municipal electric utility, but the water utility has been a key participant in the network. In fact, much of Ammon's success has to be attributed to the willingness of multiple departments to work together, supportive and thoughtful city council members, and a Technology Director willing to think outside the limits of how things had traditionally been done.

We've been covering Ammon for a few years, those stories are available here.

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 25 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 Fit and the Conniptions for the music, licensed using Creative Commons.

Fork in the Road For UTOPIA: Forward or Backward? Community Broadband Bits Episode #85

The Utah Telecommunications Open Infrastructure Agency, which we have written about many times, is at a crossroads. An Australian corporation specializing in infrastructure is prepared to infuse $300 million into the project but the Utah Legislature may prohibit it from expanding and even from using existing connections outside member cities.

We asked Jesse Harris of Free UTOPIA and Pete Ashdown of XMission to join us for Community Broadband Bits Episode #85 to sort out the stories.

Jesse explains the potential Macquarie investment and how the bill HB60 could hurt both that deal and more broadly, connectivity in the area. Pete Ashdown discusses how he learned of the bill and what it would mean to his business if the network were able to be expanded.

We previously spoke with Pete Ashdown and Todd Marriott about UTOPIA in Episode 3 of this podcast.

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 15 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 Fit and the Conniptions for the music, licensed using Creative Commons.

UTOPIA Again Targeted by Bill in State Legislature

Kansas is not the only place where the cable and telecom lobbies are attacking publicly owned networks. Jesse Harris from FreeUtopia.org reports that State Rep. Curt Webb has introduced HB60, aimed at UTOPIA. From the story:

As the bill is currently written, UTOPIA wouldn’t just be prevented from building to people willing to pay for it. They could also be required to shut down any existing services and be prohibited from maintaining their backbone that links cities together. It would effectively be a death sentence on any network that isn’t entirely within member cities AND can connect to an exchange point to reach ISPs and the rest of the Internet.

FreeUtopia also reports that the bill does not affect cable, DSL, wireless, or any other technology. Harris writes:

Naturally, I had to follow the money and it explains a lot. Rep. Webb has taken contributions from CenturyLink and the Utah Rural Telecom Association. 

As an observation, I take issue with the state's fiscal note on HB60. It reports that enactment of the bill "likely will not result in direct, measurable costs for local governments." The fiscal note also concludes that "enactment of this bill likely will not result in direct, measurable expenditures by Utah residents or businesses."  

If this bill ends UTOPIA in certain areas, affected government, residential, and business customers will lose the competitive rates they now enjoy - direct and measurable! See Pete Ashdown's comment on Jesse's story - he runs XMission, a beloved local ISP that uses UTOPIA to connect to some subscribers.

This bill is another example of how cable and telephone company lobbyists are not just trying to shut down municipal networks, but any possible public private partnerships. This is emphatically not about tax dollars, as Jesse rightly notes:

These extensions help lessen the burden on taxpayers as a whole by shifting more of the costs onto subscribers, but it doesn’t cost any city a red cent.

Kansas Legislature Introduces Bill to Limit Internet Investment

Get updates to this story here.

With Senate Bill No. 304 [pdf], the Kansas Legislature will consider a bill to revoke local authority to build networks. If passed, this bill would create some of the most draconian limits on building networks we have seen in any state.

The language in this bill prohibits not only networks that directly offer services but even public-private partnerships and open access approaches. This is the kind of language one would expect to see if the goal is to protect politically powerful cable and telephone company monopolies rather than just limiting local authority to deliver services.

The bill states that the goal is to

encourage the development and widespread use of technological advances in providing video, telecommunications and broadband services at competitive rates; and ensure that video, telecommunications and broadband services are each provided within a consistent, comprehensive and nondiscriminatory federal, state and local government framework.

Yet the bill does nothing but discourage investment, with no explanation of how prohibiting some approaches will lead to more investment or better services. It does not enable any new business models, rather it outlaws one possible source of competition for existing providers.

The bill contains what will appear to the untrained eye to be an exemption for unserved areas. However, the language is hollow and will have no effect in protecting those who have no access from the impact of this bill.

The first problem is the definition of unserved. A proper definition of unserved would involve whether the identified area has access to a connection meeting the FCC's minimum broadband definition delivered by DSL, cable, fiber-optic, fixed wireless or the like. These technologies are all capable of delivering such access.

However the bill also includes mobile wireless and, incredibly, satellite access. As we have noted on many occasions, the technical limits of satellite technology render it unfit to be called broadband, even if it can deliver a specific amount of Mbps. Satellite just does not allow the rapid two-way transmitting of information common to modern Internet applications. Mobile wireless comes with high costs, prohibitively low monthly caps, and often only works in some areas of a rural property. This is not a proper measure of having access to the Internet.

The second problem with the fake unserved exemption is the challenge of demonstrating an area meets it. If one suspected that a territory with over 90% of the residents did not meet the overly broad definition, one would have to engage in an expensive survey to prove it at the census block level. Data is not ordinarilly collected at that granular level - and even when it is, it is often based on unverified claims by existing carriers.

Even if anywhere in Kansas qualified as unserved under this definition, the cost of proving it would only add to the extremely high cost of building to such a low density population, breaking any business plan that could attempt it.

This is not the absolute most restrictive bill we have seen revoking local authority to build networks, but it is second. It does allow communities to build networks for public purposes, including schools, which is the differentiator in this case.

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These types of bills make a mockery of our political system. Whether to invest in essential infrastructure (or how to) is a decision that should be made at the local level, where people know how their unique mix of assets and challenges relate to ensuring everyone has fast, affordable, and reliable access to the Internet. There is no need for the state or federal authority to overrule local decision-making. The only reason we see it popping up in state after state (most recently Georgia) is because powerful cable and telephone companies want to ensure they face no competition - even in the most rural areas of the country.

This is not a matter of taxes. As we note in a recent fact sheet, most community networks have not used taxpayer dollars. Meanwhile, the cable and telephone companies have a history of benefits from the public sector, from ongoing subsidies to having built their networks originally as monopolies protected from competition.

For those new to this issue, I highly recommend our fact sheets on community networks, videos, and our interactive map of community networks.

We have covered many stories in Kansas over the years, including the network in Chanute that has helped many local businesses (see our case study) and a more recent investment by the city of Ottawa.

We will provide ongoing coverage as this bill moves forward.

The Challenge of Open Access - Lessons Learned Part III

To finalize our series on reflections from Seattle and Gigabit Squared, I discuss open access networks and how the requirement that a network directly pay all its costs effectively dooms it in the U.S. Read part one here and part two here. I started this series because I felt that the Gigabit Squared failure in Seattle revealed some important truths that can be glossed over in our rush to expand access to fast, affordable, and reliable Internet connections.

The benefits of public-private-partnerships in these networks have often been overstated while the risks and challenges have been understated. We have seen them work and believe communities should continue to seek them where appropriate, but they should not be rushed into because they are less controversial than other solutions.

Sometimes we have to stop and remember that we will live for decades with the choices we make now. It was true when communities starting building their own electrical networks and is still true today. I hope the series has provided some context of how challenging it can be without removing all hope that we can stop Comcast, AT&T, and others from monopolizing our access to the Internet.

In this final piece, I want to turn to a different form of partnership - the open access network. I think it follows naturally as many in Seattle and other large cities would be more likely to invest in publicly owned fiber networks if they did not have to offer services - that being the most competitive, entreprenuerial, and difficult aspect of modern fiber networks.

Chattanooga construction

The desire to focus on long term investments rather than rapidly evolving services is a natural reaction given the historic role of local governments in long term infrastructure investments. Fiber certainly fits in that description and as many have noted, the comparison to roads is apt. An open access fiber network allows many businesses to reach end users just as roads allow Fedex, UPS, and even the Post Office, to compete on a level playing field.

In an open access approach, the local government would build the network out to connect all residents and businesses but not directly deliver services. Instead, multiple independent Internet Service Providers (ISPs) would compete on the network for business, ideally specializing in different niches - some providing great video game optimizations and others focusing on meeting small business needs.

Unfortunately, there are reasons we have not seen this approach gain widespread traction. The model is more difficult than is readily apparent.

A large part of the difficulty comes from incumbent providers that refuse to use the fiber network. The cable and the telephone companies claim that they don't want to abandon their assets, but that is not the main reason they have refused to participate in these networks. The big cable and telephone companies know that they have terrible reputations and would be slaughtered in a competitive market - so they put great effort in ensuring that they face as little competition as possible. Allowing the open access market to develop would all but ensure mighty Comcast would have to compete against local providers that offer much better customer service, lower prices, and more.

From an economic perspective, an ideal open access network would be one physical fiber network on which all ISPs compete. With a take rate over 80 percent, the revenue would likely be sufficient to pay the costs of building the network, operating costs, AND the ISP costs. But because the cable and telephone companies have fought against open access, subscribers are often split among three different physical infrastructures (cable, copper telephone lines, and the fiber network), generating too little revenue to pay the costs of building the fiber network.

If a major metro area does a feasibility study to build a citywide open access network fiber, it will find that the network will almost certainly not pay for itself using a conventional private sector accounting system. The interest on the debt required to build the network accrues faster than revenue. Of course, the roads and bridges don't pay for themselves via user fees either, but we still invest in them.

Community BB Logo

In a recent podcast, we discuss how over the first five years, a network can save more in aggregate for the community that it costs to build. But those benefits acrue individually to households. Thus far, very few communities have used this approach - to raise monthly taxes by $3 to save $10 on household telecom bills, for instance. Leverett is a rare example of this approach.

That does leave another option - building an open access network incrementally, as Danville has done in Virginia and Palm Coast FiberNet in Florida, among others. This is a viable option for just about any community but comes with the difficult reality that connecting everyone could take decades. And there are still other gotchas.

Some communities that wanted to build an open access network have found it can be challenging to find service providers that will operate on the network. Sometimes a local ISP can step up, as in Danville and in other cases, but not always. Until a network has thousands of potential subscribers, ISPs may not be interested in offering services. But incremental approaches will often start with just tens or hundreds of subscribers.

We have written elsewhere of how important it is to have at least one strong, trusted provider on the network. An important lesson from Provo, among other places, is the difficulty in recovering once a network has a bad reputation. A bad provider can ruin the name of a perfectly good network, especially as most people will not know whether to attribute any problems to the physical network or ISP.

UTOPIA Logo

All of that said, open access offers a tremendous promise. Networks like UTOPIA and Chelan PUD (Washington) have been unable to pay the capital cost of building the network solely from revenues but offer some of the fastest speeds in the nation at a fraction of the price we pay elsewhere. I recall the testimony of a local business to the Utah Legislature who basically said, "Yeah, my taxes went up a little -- but my monthly telecom bill went down a lot."

Nonetheless, nearly every municipal fiber network has been built and financed with the expectation that it would pay for itself - generally breaking even years after the high upfront investments have been made. Each community should be free to choose what expectations it has in building the network it needs to ensure a vibrant economy and high quality of life for everyone. Our role has been to help them understand that choice and push back on those who want to take it away. I hope this series helps in that effort.

Many of the municipal fiber networks that now directly provide services started with a hope of working with a local partner or building an open access network. As they considered their options, they found they effectively had to choose between doing nothing and venturing into a very challenging business.

There are few easy answers for communities stuck with subpar Internet access, or even for those that regard "par" as unacceptable. When Lafayette Mayor Joey Durel was presented with the idea of a municipal fiber network shortly after taking office, he was skeptical. But he ultimately decided they should examine it - saying "shame on us" if they didn't at least see what they could do. Maybe they would hit a brick wall... or maybe they would build one of the most impressive broadband networks in the country. That was good advice.

No one solution works for every community. Thus our guiding philosophy: communities should be free to choose for themselves the solution they prefer.

Construction photo courtesy of Chattanooga Electric Power Board