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Roundup: Lafayette, Syracuse, Incumbent Bailout, and MAIN
- Lafayette's groundbreaking network is exciting the folks at Governing.com - they say, "The Future of the Internet is in Lafayette, Louisiana."
Ellen Perlman hints are future coverage of the network as well:
To put it in perspective, that's 10 times faster than already very fast Internet. And more than 100 times faster than the Internet "starter" plan that, for example, Verizon is offering. Basically, Lafayette will have a city Intranet, the way universities and technology companies do. So residents will have a very fast connection within the city-parish "campus." Critics wonder why residents need such speeds and why the city had to build its own network. An August story in Governing will get into detail about that.
- Green Party Candidate for the Syracuse City Council speaks out on the need for a publicly owned fiber network in the city:
Hundreds of US cities have municipal ownership of their broadband utilities and their customers pay 30% less on average for cable TV, internet, and phone. Time Warner’s cable franchise is up for renewal. Now is the time to municipalize our broadband utility for (1) lower fees, (2) community control of available channels (from Democracy Now to the NFL Network), (3) quality Public Access, Education, and Government (PEG) programming, (4) universal access to high-speed internet, and (5) up-to-date public access video and web-based media creation centers. Every Syracuse should have first-class, affordable access to internet, cable, and phone communications. The Syracuse economy needs first-rate affordable broadband to progress. The profits now exported to Time-Warner can stay in the community for our own benefit through municipal cable.
Advocates for such a fiber network in Syracuse have a website loaded with resources.
North Carolina Fight over Mapping
According to a map made available online last week by the industry-backed nonprofit Connected Nation, broadband is available to 92 percent of North Carolina households. That number seems too high to some legislators and public interest advocates, who are concerned that overstating the amount of access will hurt the state's chances of receiving federal grants. "You'll be pleased that over 90 percent of the households in North Carolina are now served by one or more broadband providers," Connected Nation representative Joe Mefford said during the unveiling of the map at the state legislature last week. "The maps also, by that, indicate that there's been a huge investment in broadband in this state already."I have dealt with Connected Nation's maps here in Minnesota, and the technology is awful. In an age of Google Maps and impressive mashups, they produce clunky maps at sufficiently large file sizes that you need fast broadband to open them. I pity anyone trying to use their maps on a slow DSL connection. On top of that, they continue to classify cellular services (that often come with a very small monthly cap) as broadband in order to overstate how many people have access. Fortunately, Fiona spoke to Craig Settles and he offers some great commentary.
Craig Settles, an Oakland, Calif.-based consultant on broadband technology, said the broadband stimulus has been hijacked by the telecommunications industry. "It started as a noble effort," he said, "but it's a complete and total travesty all around." Each state must choose one mapping entity in order to be eligible for any of the broadband stimulus money. There is $350 million set aside specifically for mapping, to be divided between the states. That's too much money, Settles thinks, and the terms favor Connected Nation and the industry. "We're going to pay you millions of dollars to collect all this information, but you can't tell anybody what this information is? That is the most stupid-ass thing on the planet.
Short Shots
Some shorter news items from this weeks' news:
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Salisbury may be a great example of just how a community should build a network. They have opened many chains of communication with citizens to keep everyone involved in the process:
To get the message out about their fiber-to-the-home cable utility now under construction, Salisbury city officials already have conducted radio, newspaper and magazine interviews.
The city also hopes to provide daily "fiber" updates on its blog (www.salisburyftthblog.com) and have a continuing newspaper advertisement called "Straight Talk about Fiber" in the Post.
Any community considering the hard path of building one of these networks should take note of how Salisbury is ensuring citizens know what is happening and why this network is important to the city's future.
Clarksville Department of Electricity (CDE) Lightband creates local careers as they roll out the FTTH network that will deliver triple play services. They also have a spiffy video:
This video is no longer availableGarn Anderson, of the Knight Center of Digital Excellence says "Smart Infrastructure starts with planning."
The success in and around Cleveland demonstrates not only the benefits of Smart Infrastructure, but also the reality that local communities are best equipped to implement today's fundamental need for infrastructure that empowers innovation.
He expands on those thoughts in a post on the Community Connections blog.
Salisbury Starts Building FTTH Network
Salisbury, a city of nearly 30,000 in North Carolina, has started building its full fiber-to-the-home network. Salisbury had some difficulty in funding the network at first due to the collapsing economy last year. However, they securing financing in November 2008 and have now started building the network. A recent Salisbury Post article notes that Atlantic Engineering Group is installing conduit. However, residents will have to wait more than a year to take any services. They still have to build the multi-million dollar head end. They already have agreements covering access to the telephone polls -- which are owned by Duke Energy and AT&T.
Services Comparison
Community broadband networks offer some the highest capacity connections at the lowest costs. Many of these communities, before building their networks, were dependent on 1.5 Mbps connections that cost hundreds of dollars, or less reliable DSL and cable networks. The community broadband networks below are full FTTH networks, so the advertised speeds are the experienced speeds -- unlike typical cable advertised speeds, which users pay for but rarely experience due to congestion on the shared connection. In comparing some of the fastest publicly owned broadband networks to some of the fastest national private sector networks, we found that the publicly owned networks offer more value per dollar. Update: A few weeks after this was published, Verizon upped its speeds and prices for several of the tiers.
The data we used is below. We thought about comparing also Qwest's "Fiber-Optic Fast" speeds, but their fastest upload speeds are below 1 Mbps, which makes them too pokey for the above networks.
Community Broadband Networks: The Best of the Best
Note: Speeds are expressed as Mbps Down/Up. Each network has distinct offering for each tier.
Tier 1 | Tier 2 | Tier 3 | Tier 4 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
City | State | Speed | Price | Speed | Price | Speed | Price | Speed | Price | Notes |
Lafayette | Louisiana | 10/10 | $28.95 | 30/30 | $44.95 | 50/50 | $57.95 | - | - | All connections come with 100Mbps connections to others on the local network. |
Wilson | North Carolina | 10/10 | $34.95 | 20/20 | $54.95 | 40/40 | $99.95 | 60/60 | $199.95 | There is also a 100/100 tier for $299.95. These prices come from the bundled options. There is one unbundled option - 20/20 for $59.95 |
UTOPIA | Utah | 15/15 | $39.95 | 30/30 | $49.95 | 50/50 | $59.95 | 100/100 | $147 | This is an open access network, 100/100 is not offered by all service providers |
Tullahoma | Tennessee | 10/1 | $37.95 | 5/3 | $49.95 | 20/5 | $59.95 | 50/15 | $149.95 | There is also a 100/30 tier for $299.95 |
Loma Linda | California | 5/5 | $29.95 | 10/10 | $49.95 | 15/15 | $99.95 | - | - | |
Compare to the best from the private sector: | ||||||||||
Comcast | DOCSIS 3 in MN | 1/.384 | $39.95 | 12/2 | $59.95 | 16/2 | $69.95 | 22/5 | 79.95 | A higher tier of 50/10 is available for $139.95/month. These are unbundled prices, bundling generally saves $15/month. Speeds are "up to" depending on neighborhood congestion. Comcast marketing makes it difficult to understand what speeds you are paying for. |
Verizon | FiOS | 10/2 | $49.99 | 20/5 | $59.95 | 20/20 | $69.95 | 50/20 | $144.95 | These are unbundled prices - bundling with phone reduces monthly price by $5. FiOS is not available throughout Verizon footprint. |
The table reflects real rates, not short-term introductory rates. Do not be fooled into thinking that community broadband networks are able to offer the best deal because they are use taxpayer dollars. Very few community networks have ever used taxpayer money. Most networks are built using revenue bonds - which means that private investors fund the network, and are typically repaid over a period of twenty years using revenues generated by the services. Some cities choose to "back" the bonds with taxes -- which means that if the network does not generate sufficient revenue, the city will make up the difference with public money. Other cities choose not to back the bonds; this is a choice made by each community and impacts the interest rate on the bonds. In most cases, community networks have been safe investments that have not missed debt payments because the communities had an urgent need for broadband. In many cases, they have so many people wanting to take service, they have long lists for the installers. The idea that these networks frequently fail is an utter myth. However, not all community broadband networks offer the blazing speeds at great prices displayed above -- some were built five years ago, when those speeds were sufficient. Others do not feel the need to push the envelope, the community is content with what they have. However, they are able to meet higher demands if a citizen requires it. So even if a community network advertises its highest tier as being an 8/1, it is likely able to offer an even faster connection to those who need it. This is one of the many benefits of community broadband - the network is accountable to the community. The community broadband networks being built today almost always offer the fastest speeds currently available - as seen above with two ongoing builds, Lafayette and Wilson.
Salisbury, NC, Fends Off Comical Attack on Community Broadband
Level Playing Field
Many private, often incumbent and monopolistic, providers use the term "level playing field" as code for ensuring communities are unable to build their own networks. They do not actually want a "level playing field," they want more advantages for their businesses.
Consider the fight in 2009 over this issue in North Carolina:
HB 1252 would create extraordinary financial accounting and administrative burdens on municipal broadband providers that would render their existence fiscally difficult, if not impossible. The bill also subjects municipalities to the new jurisdiction of the North Carolina Utilities Commission, while not requiring the same of private providers. Also troubling is the injunctive relief provision, which could encourage litigation for purposes of gaining competitive advantage. Furthermore, the legislation appears to prevent municipalities from pursuing alternative funding sources, such as broadband grant programs included in the Federal stimulus bill, the American Recovery and Reinvestment Act of 2009. Source: Save NC Broadband Blog
Additionally, the process in North Carolina reveals the extent to which private providers like Time Warner buy legislation in some states.
While big companies like Time Warner Cable pretend to be the underdog compared to community networks, the reality is that big national corporations have far more advantages than any local government. We created this video to illustrate the point:
Cross-Subsidizing
Cable and telephone companies are able to cross-subsidize their networks - they can charge more in the areas they serve where there are no competitors in order to charge less in a competitive community. Numerous state and federal laws prohibit public entities from cross subsidizing across services. Further, when private companies are forced to have open meetings and disclose their business plans like their public sector counterparts, we will be closer to a "level playing field."
Who Has the Advantage?
In 2005, the Florida Municipal Electric Association rebutted many of the common charges levied against publicly owned networks. The following charts are from "The Case for Municipal Broadband in Florida." It must be noted that different states have different laws, but in general, claims that the public sector has overwhelming advantages over the private sector are absolutely false.
Taxes and revenues | Public | Private | Gross Receipts Taxes | Yes | Yes |
---|---|---|
Sales Tax | Yes | Yes |
Communications Services Tax | Yes | Yes |
Documentary Stamps | Yes | Yes |
Intangibles Tax | Yes | Yes |
Property Tax | Yes* | Yes |
Payment in lieu of taxes | Yes | No |
Corporate Income Tax | No | Yes |
* Under dispute at the Florida Supreme Court | ||
Regulatory Requirements | Public | Private |
Public purpose requirement | Yes | No |
Public records law | Yes | No |
Open meeting law | Yes | No |
Competitive bidding | Yes | No |
Civil Service | Yes | No |
Public hearings on budget/financing | Yes | No |
Public election or recall of CEO (Mayor) | Yes | No |
Conflict of interest standards | Yes | No |
Intra-fund transfer restrictions | Yes | No |
Investment restrictions | Yes | No |
Local regulation via referendum and initiative | Yes | No |
"Private sector companies have completely different goals, driven by shareholders’ and the financial community’s demand for high, near-term profits from user revenues. In the face of this reality, it is completely inappropriate to use of conventional Wall Street metrics to judge whether a municipal project is successful. The metric for success certainly should not be: “If this were a private firm, would Wall Street like it?”
Source: Jim Baller and Casey Lide - "The Case for Public Fiber-to-the-User Systems"
The very idea that one could somehow balance the advantages and disadvantages of different providers is suspect, as explained by the Georgia Public Service Commission (cited by Baller and Stokes):
Preventing anticompetitive practices, unfair competition, and abuse of market position does not mean that the Commission must impose conditions on every applicant which has some advantage not shared by every other applicant. The Commission is required to treat all LEC's [Local Exchange Providers – i.e. phone companies] equally, not make all LEC's equal. BellSouth and the large cable companies certainly enjoy better capital costs than a typical small business owner. Does this put the small company at a competitive disadvantage? Of course. Should the Commission determine which LEC has the highest capital costs and require that all other companies impute that amount into their rates to level the playing field"? Certainly not. If Marietta has to comply with expensive open records requirements or expensive municipal bidding requirements, should those costs be imputed into the rates of all private companies? Again, no. Similarly, if BellSouth has a large tax write-off one year, it would be ridiculous to require that they impute into their tax rates the taxes they did not have to pay merely because some other company may not have had a tax write-off that year.
What is undeniable is that the public sector and the private sector serve different ends. In general, the private sector excels at maximizing returns for investors and focuses on the short term. The public sector primarily invests for the long term and in order to maximize social benefits. Therefore, the public sector and private sector use different balance sheets.
How public balance sheets differ from private
If a broadband network encourages economic development because it offers fast speeds, reliability, and affordable prices, a public balance sheet benefits tremendously as the community prospers. However, private balance sheets would not reflect many of the social benefits because they cannot be monetized for shareholders. |
If a broadband network discourages economic development by foregoing costly upgrades that would improve service, the private balance sheet may benefit but the public balance sheet would suffer due to a decrease in social benefits. |
When subscribers make their monthly payments, it shows up once on the private balance sheet (assuming the owner is located outside the community). Some of that money returns to the community in the form of taxes and salaries for technicians. However, on a public balance sheet, the revenue has a larger multiplier effect because that money stays in the community.
Another significant difference between the balance sheets is how much profit is necessary. On a private balance sheet, there is a pressure to profit quickly and increase profits year after year. On the public balance sheet, if it takes ten years to break even, that is acceptable (when was the last time a road "broke even?"). The pressure to profit on the private side results in off-shoring or cutting back on local support that degrades service. On the public side, if a network takes an extra year to generate net income because it has hired another local technician to ensure prompt service, the community benefits.
We are not opposed to profit -- in fact, we work regularly with small businesses to create an environment that encourages them to succeed. In order to succeed, they need access to fast, affordable, and reliable broadband connections. But networks that prioritize profit first tend not to deliver the connections on which all other businesses depend.
Five Days on the Digital Dirt Road
InternetforEveryone.org is working to shed light on the millions of Americans who live without regular Internet access or lack the training or equipment to get online. A small reporting team is traveling to communities across the country to tell people's stories. Free Press' Megan Tady interviewed residents of Los Angeles, Calif., and Washington, D.C. On this site, you can follow our trek and get an up-close view of America’s urban digital divide. InternetforEveryone.org is working to shed light on the millions of Americans who live without regular Internet access or lack the training or equipment to get online. A small reporting team is traveling to communities across the country to tell people's stories. Free Press' Megan Tady interviewed residents of Los Angeles, Calif., and Washington, D.C. On this site, you can follow our trek and get an up-close view of America’s urban digital divide.