Catharine Rice gave a terrific presentation detailing the ways Time Warner has responded to the municipally-owned Greenlight fiber-to-the-home network: raising the rates on everyone around them and cutting great deals to Wilson residents. I saw the presentation on the Save NC Broadband blog which also has a link to her slides - make sure you follow along with the slides. She details how Time Warner has raised rates in towns around Wilson while lowering their prices and offering better broadband speeds in Wilson. Once again, we see that a community building their own network has a variety of benefits: a superior modern network that is community owned, lower prices on the last-generation network from the incumbent, and some investment from the incumbent. Now the question is whether Wilson's residents will be smart enough to support the publicly owned network in the face of Time Warner's low low prices - a recognizing that a few short years of low prices (for low quality) are not worth abandoning the publicly owned network and the benefits it has created in the community.

Cable pricing in the Raleigh-Durham-Cary NC Market from City of Wilson, NC on Vimeo.

A video from Chelan shows the benefits of a publicly owned fiber-to-the-home network in a rural public utility district in Washington State. The network has literally saved lived with tele-medicine applications. Citizens also cite educational advantages and increased business opportunities thanks to this smart investment.

This video is no longer available.

This community of almost 10,000 near St. Louis has taken another step toward creating competition in broadband by investing in a publicly owned fiber network. In April of 2009, the community voted overwhelmingly (75%) yes to a question authorizing the network with revenue bonds that would be backed by electrical revenues from the city's public power company. They have started the first phase (focusing mainly on businesses though some residences will be passed) by awarding bids for construction (the bids were below expectations - a slow economy is a good time for infrastructure investments due to the low prices). Though the project has spurred some debate, the majority remain in strong support, as demonstrated in a recent article about the project.

Guillot presented the council with more than 100 email replies from Highland Chamber of Commerce members who are in favor of the fiber project, including banks, schools, manufacturers, realtors and other businesses. “There are currently other companies providing like services in Highland. This project will not end their relationships with the city, rather it will give consumers a choice and force competitors to provide a better product or better service to remain competitive,” Guillot said. “This will also keep more revenue in Highland.” Highland resident Brad Korte agreed. “The fiber-to-the-home parallels paving the streets in the 20s, starting the city’s electric system and water department. I would rather spend my money, and take a chance with my money on Highland,” he said. “If we don’t take a chance on this, I think we would regret it in a couple of years.”

The project will proceed more quickly if they are successful in an application for stimulus funds under the broadband programs. Regardless, the first phase will be completed in a year and needs a 23% take rate to break even financially (ignoring the many indirect benefits of such a network).

After campaigning on building a publicly owned fiber-to-the-home network in Seattle, Mayor McGinn has decided to maintain leadership at the Department of Information Technology. Department head Bill Schrier will stay on, continuing his work that lays the groundwork for a community-owned network.

He said he expects the city to apply for federal stimulus money in the first part of the year to move toward that goal. In addition to improving broadband access in homes, the initiative could help Seattle City Light implement smart-grid infrastructure, and improve public safety communications.

Another article further notes their shared ambition:

"Mayor-elect McGinn ran on a platform of bringing fiber to every home and business in Seattle, something I've advocated for several years," Schrier commented.

No post discussing broadband in Seattle is complete without a reference to Glenn Fleishman - who both wrote another story discussing the situation and then patiently responds to many comments in the thread below it. Discussing Tacoma's publicly owned Click! network, he notes that Tacoma's investment benefited everyone:

Click being built actually helped what has become Qwest and Comcast: by creating a market and making it feasible for professionals who need high-speed Internet access in Tacoma to live there, Click spurred the two incumbents to improve their networks, compete, and gain new revenue. Comcast actually thanked Tacoma Power publicly years ago; not sure it would today, but it was seen as a big boost for the viability of competitive broadband.

Photo used under creative commons license from flickr.

Highland, Illinois, having overwhelmingly approved a referendum in April, 2009 to own and operate a fiber-to-the-premises system, has continued to examine the potential for a publicly owned fiber-to-the-home network. Most of the local government is supportive but one councilmember is vehemently opposed, leading to a ""boom or bust?" article in the local paper. Interestingly, the city had a significant outage in 2008 due to a fiber cut outside of town.

The new redundancy brought by fiber that would mean a decrease in the chances for a repeat of the winter 2008 when a third-party contractor working to put up a communications tower for AmerenIP cut a fiber optic cable near Maryville, knocking out phone service, most cellular services and Internet service in Highland for nearly seven hours, Latham [city manager] said.

Worried about the future, Latham then spoke with the incumbent provider:

“There was another one for a short span six weeks after that and I spoke with a Verizon official if there were any plans to come in a build a tieback to create redundancy and they said no. The city is fighting for the best interests of this community.”

Whether Highland can get broadband stimulus funding in round 2 or not, they are on the right path for ensuring their community is ready for the future.

The Jackson Energy Authority (JEA) network now has over 16,000 subscribers and offers speeds up to 100 Mbps for local businesses and 25 Mbps for standard residential users.

Jackson is considered one of the most technologically advanced cities in the U.S. We have four competitors in the market with AT&T, Bell South, Charter and JEA. We computed that over $8 million to $9 million has been saved by residents in this city when compared to other cities of its size because of the competition.

These are the kind of hard-to-quantify savings that too often go unnoticed in discussions about the value of publicly owned broadband projects. What is the value of competition? How much economic development has occurred directly from the JEA network and indirectly from the lower prices and greater investments that result from competition?

As someone who has long researched and followed developments in Burlington Telecom (BT), the city-owned triple-play full fiber-to-the-home network in Vermont, recent developments between BT and the Mayor's office have been deeply disappointing. For those who haven't heard, BT is in the middle of a major controversy -- and it is hard to tell just what is going on (for background prior to current problems, read my Burlington Telecom Case Study and Fact Sheet). I have wanted to comment on the situation for many weeks but have been waiting as each day seems offer another piece of the BT puzzle. I'll be offering more commentary about it in the future. However, I do not want to the let the current problems lend any credence to the idea that BT has failed. BT is caught in the middle of a political controversy around the Mayor but should continue providing the best telecom services available in the community. BT has two main problems currently:

1. It has not passed the entire city within the timeline to which it agreed in receiving its Certificate of Public Good (CPG)
2. BT has, apparently, borrowed $17 million from the city's pool (used generally for short-term financing of projects) in contravention of its CPG which states that any money borrowed from the City must be paid back within 60 days. This CPG condition makes running a network more difficult for BT than it would for a company like Comcast - who can readily self-finance short-term borrowing. Across the U.S., communities have to deal with laws and regulations that benefit private companies over public networks. When the economy fell apart, BT was unable to refinance its debt to continue its expansion and chose to borrow from the City to continue connecting new customers. This was the right decision - the CPG did not anticipate such conditions and the terms for outside financing in late 2008 were wretched.

I say "apparently" borrowed above because it is far from clear if all of those funds actually went to BT. As Steve Ross explains here, it is not even clear if BT really required all that it borrowed from the City.

Highland, a city in Illinois, has been recommended by the governor to receive a grant from the broadband stimulus program. Highland plans to build a full fiber-to-the-home network after first connecting the schools and public buildings (a phased approach that has worked well elsewhere). Stimulus funds would expedite the buildout that has already demonstrated strong community support.

Highland city voters passed — with 75 percent voting in favor — three referendums April 7 concerning the idea to bring fiber-optic cable connections to every home and business within the city. It will offer high-speed Internet service, telephone and cable TV. Shortly after, the council had authorized construction and operation of a telecommunications and cable television system, while emphasizing the need for careful planning. The council also voted to set up a three-member Telecommunications Advisory Board to oversee the process.

Many publicly owned community fiber networks offer symmetrical connections - allowing subscribers to both upload and download content at the same speeds. This approach treats the subscriber as both a producer and consumer of content (one of the reasons I generally avoid calling a subscriber a "customer" or "user"). Nearly all private network offerings are asymmetrical - DSL and cable are more less subject to constraints that encourage asymmetry, but in the case of fiber, one might assume that private companies are generally more interested in selling content to subscribers rather than encouraging them to create their own. These companies have generally argued that symmetrical connections are just not necessary because most people are inherently more interested in downloading content than uploading - and note that on existing networks, people tend to download more than they upload. However, the aggregate data of some 7,000 users on a fast, symmetrical network in Europe suggests that when subscribers have the opportunity, their upload usage balances the downstream usage. We should continue pushing for increased upstream capacity from providers - especially providers that have to listen to their community. As for absentee-owned companies only interested in profits, well, good luck. Which brings me to the flu. One would rationally expect that when a profit-maximizing company builds a telecommunications network, it will make different trade-offs when it comes to redundancy and spare capacity. Planning for high-impact, low probability events is not as high on the priority list of a company looking out first for shareholder interests. On the other hand, communities are more likely to be concerned. Suburban community Lakeville in Minnesota, has been significantly motivated in its attempts to improve fast broadband access by a recognition that an epidemic or pandemic would leave the community paralyzed and its networks unable to cope with a many telecommuters. DSL and cable networks cannot handle a sudden surge in usage.

For another real-world example of how companies respond to public entry into the telecom market (as opposed to theoretical arguments about crowding out investment), let's look back down to Lafayette and how cable incumbent Cox responded:

“Cox froze the cable rates in Lafayette, and they didn’t freeze the rates in other areas,” said Terry Huval, director of LUS, a municipally owned utility company which fought major incumbent opposition before building an FTTH network in Lafayette and starting to offer service earlier this year. “We figured our citizens saved over $3 million in cable rates even before we could offer them service.”

I have yet to see a cable company leave a market or reduce investment following the introduction of a public competitor. The opposite tends to happen - they increase investment and often drop prices or leave them lower than in surrounding, non-competitive areas. Often, the rates are not really advertised but if you call from the competitive area, they will offer a better deal:

Trae Russell, communications manager for EATEL, the local telephone franchise in Ascension, La., and some surrounding communities, had seen the same thing happen in his area, when EATEL started offering FTTH-based services in 2006. In fact, EATEL went so far as to take out an ad in the Lafayette newspaper, alerting cable customers there to the discounts that Ascension customers were getting and forecasting similar lower rates in Lafayette once the LUS network was in the works. “It was an incredibly bold move on our part,” Russell said. “Cox came in with an incredibly aggressive promotion for TV service with every bell and whistle you could imagine. We couldn’t figure out how they could even make money on it. So we took out an ad in the Lafayette newspaper that basically said, ‘Hey Lafayette, look at the great prices you are going to get from Cox.’ Cox was not amused.”

This is also a lesson for those who want to build a public network. Don't expect to win just because you have a better service and you offer lower prices from what was available before a competing network is built. The incumbent has often already paid off its network. Additionally, incumbents are often larger companies that pay less for their television contracts, so they can lower prices farther than one might expect initially.