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Chanute's FTTH Project on Hold Indefinitely

Changes in leadership in Chanute have put the community's FTTH plan in suspended animation. In April, the City Commission decided to delay financing shortly before the scheduled bond sale. It is unfortunate that residents and businesses will lose the opportunities the fiber deployment would bring. Nevertheless, they deserve the right to make their own choices, good or bad.

The community of Chanute deployed a network incrementally with no borrowing or bonding in order to improve efficiencies, save public dollars, and control connectivity for municipal facilities. Local schools and colleges, struggling to compete, began taking advantage of technology in the classroom and expanded distance learning. The network eventually created a number of economic development opportunities when community leaders started providing better connectivity to local businesses. We told Chanute's story in our 2013 report "Chanute's Gig: One Rural Kansas Community's Tradition of Innovation Led to a Gigabit and Ubiquitous Wireless Coverage." 

Chanute made history when it was the first municipality in Kansas to obtain permission from the Kansas Corporation Commission to issue bonds for the project. They also became the first municipality in the state to seek and receive "eligible telecommunications carrier" (ETC) status. Chanute was awarded over $500,000 in Rural Broadband Experiment Funds from the FCC. Whether or not they will still be able to take advantage of those funds remains a question. After taking action and putting so many of the necessary pieces in place, it is disheartening to see the plan abandoned by politicians.

Regardless of the future of the FTTH project, Chanute has the infrastructure in place to encourage more economic development, connect community anchor institutions, and allow the community to control its own costs. The FTTH project is still a possibility.

You can learn about the origins of Chanute's network in episode #16 of the Community Broadband Bits podcast.

Another Rural Telephone Cooperative to Deploy Gigabit Fiber Network

Residents in the southeast rural town of Frontenac, Kansas, will have access to fiber by the spring of 2016, reports the FourStatesHomePage.com

After receiving approval from the Frontenac City Council, the Craw-Kan Telephone Cooperative announced that it intends to deploy fiber within the city of 3,400. Each home will have access; gigabit service will cost approximately $70 per month. Construction will begin this summer.

From the article and the video embedded below:

"It's just superior to anything out there. I mean, we've been doing fiber for several years. We have well over 2,000 customers, and I think we just finally asked ourselves why are we restricting the use of this fiber optic cable when it can do so much more than what most people are receiving?" said Craig Wilbert, Craw-Kan General Manager.

Chanute and Chattanooga Added to List of Rural Broadband Experiment Funds

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.

Chanute Receives State OK to Bond for FTTH Deployment

The Kansas Corporation Commission (KCC) will allow the city of Chanute move forward with its plan to serve residents and local businesses with its municipal network reports the Wichita Eagle. KCC staff had recommended that the community, which has built out a network over the course of decades, receive KCC approval. 

In keeping with an antiquated 1947 state law, K.S.A. 10-123, the city needed KCC approval to issue the revenue bonds. In keeping with the statutory requirements, the KCC found that the expansion is necessary and appropriate for the city, its consumers and investors. The KCC also also determined that the expansion will not duplicate an existing utility service.

In its filing [PDF], Chanute indicated that its network is an essential part of the local economy and the community's future:

Chanute is a rural community, and like all rural communities, access to broadband is fundamental to the well-being of its citizens and even to the survival of the community itself. Chanute does not need to convince the Commission of the importance of having access to a high- speed broadband network. The Commission is well aware of that need. The investments contemplated for Chanute's broadband network are necessary and appropriate to allow Chanute to meet that need in its territory.

As the city points out, incumbents AT&T and Cable One, do not offer anything close to the level of service of the planned gigabit FTTH network. As we cover in our 2012 report on Chanute, AT&T and Cable One seem to have no interest in serving the community beyond minimum expectations. It was the need for better services that inspired the city to build out its infrastructure and offer services to local businesses.

Prior the the KCC ruling, the Wichita Eagle reported that AT&T requested and obtained permission to intervene in the proceeding. AT&T's subsidiary Southwestern Bell Telephone Company (SWBT) petitioned to intervene in November [PDF], stating:

SWBT's interests and those of its customers may be affected by any order or determination of the Commission as may hereafter be adopted in the above- captioned proceeding.

AT&T told the Eagle:

“Any decision made by the KCC could impact AT&T’s business operations in the area, which is why we asked to intervene in the proceeding,” the company said in a written response to questions from The Eagle. “AT&T remains interested in both broadband issues and the work of the KCC.”

Larry Gates, Director of Utilities in Chanute, 
told the Eagle that the city is ready to issue the revenue bonds and begin connecting customers as soon as the KCC approves the request.

In their filing, the city also commented on the the outdated nature of the state law requirement. From the Eagle article:

In the commission case, Chanute is arguing that the 1947 law was actually designed to protect municipalities from defaulting on bonds because of private-sector competition, not to protect private-sector providers from competition with local government.

Since then, lawmakers and regulators have almost entirely deregulated telecommunication services, counting on competition in the marketplace to keep providers from charging too much or providing substandard service.

“This reasoning (behind the 1947 law) reflects an environment where construction of a telecommunications network was considered a natural monopoly, where one company could supply an entire market at less cost than two or more companies,” Chanute’s filing said. “That is no longer the case in the telecommunications marketplace.”

The 1947 law “does really sort of fly in the face of everything that has been said about competition,” [David Springe, chief consumer counsel for the Citizens' Utility Ratepayer Board] said. “It’s either a competitive world and you can stand on your own two feet, or it’s not.”

KCC staff agreed with Chanute. At the time the law was implemented, it was meant to protect the interests of the monopolies that served the rural areas, but the Telecommunications Act of 1996 shifted policy to encouraging competition.

There are other providers in the area, writes staff, but none of them can provide the caliber of services Chanute will offer. Because AT&T and Cable One do not offer services anywhere near the gigabit FTTH planned by Chanute's broadband utility, there would be no duplication of services.

Staff also agrees with the city, when it analyzes the need for the expansion. From the staff report [PDF]:

Upgrading Chanute's facilities would not only benefit the citizens of Chanute but its community anchor institutions and community business partners as well. In addition, by improving and expanding upon the fiber optic network currently in place by Chanute, Chanute is protecting its current investment. Staff therefore believes the expansion plans as contemplated are appropriate for the municipality and its consumers, and for the protection of its investors.

For a look back at Chanute's story, listen to episode #16 of the Community Broadband Bits podcast. Chris interviewed Larry Gates and then City Manager JD Lester.

Community Broadband Media Roundup - December 12, 2014

This week in Community Broadband networks... partnerships, cooperatives, and going-it-alone. For a background in muni networks, check out this recent article from FiscalNote. The article highlights Kansas and Utah's fight for improving beyond the minimum speeds. 

Speaking of minimum, the FCC announced its new "rock bottom" for regulated broadband speeds. Ars Technica's Jon Brodkin reports that despite AT&T, Verizon, and the National Cable and Telecom Association's protests, ISPs that use government subsidies to build rural broadband networks must provide speeds of at least 10 Mbps for downloads.

Rural Americans should not be left behind those who live in big cities, the FCC announcement today said. "According to recent data, 99 percent of Americans living in urban areas have access to fixed broadband speeds of 10/1, which can accommodate more modern applications and uses. Moreover, the vast majority of urban households are able to subscribe to even faster service," the FCC said.

The FCC plans to offer nearly $1.8 billion a year to carriers willing to expand service to 5 million rural Americans. 

This is a step in the right direction, but we are alarmed to see a download:upload ratio of 10:1. People in rural areas need to upload as well as download - our comments to the FCC strongly recommended raising the upstream threshold as well and we are very disappointed to see that remain a pathetic 1 Mbps.

And, from TechDirt's own "who can you trust if you can't trust the phone company department," Karl Bode found that a study by the AT&T-funded Progressive Policy Institute concluded that if Title II regulations were passed, the nation would be "awash in $15 billion in various new Federal and State taxes and fees. Bode writes that the study cherry-picked and conflated data:

The reality the broadband industry doesn't want to acknowledge is that very little changes for it under Title II if carriers aren't engaged in bad behavior. The broadband industry is fighting Title II solely to protect potential revenues generated from abusing uncompetitive markets. That this self-serving behavior is being dressed up as concern about the size of your broadband bill is the industry's best comedic work to date.

Cities Pursuing Community Broadband

Nancy Scola reported on the growing collective of "Next Century Cities." 

[The group's] early expansion is a signal of what seems to be a shift in the way Americans are thinking about high-speed Internet access: the idea that cities will the battlegrounds for the playing out of the broadband debates. One effect of these cities working so closely with Google as it rolls out its fiber network in places like Kansas City and Austin is a realization that mayors can take broadband into their own hands -- whether that's through a municipal solution like Chattanooga's gigabit network or through partnering with traditional Internet service providers such as Comcast or Time Warner Cable.

Other partnerships are also moving muni networks forward

At the same time as the Next Century Cities announcement, the Department of Agriculture announced $190.5 million in grants and loans for rural broadband and telecommunications infrastructure.

"Modern telecommunications and broadband access is now as essential to the businesses and residents of rural America as electricity was in the 1930s," said Agriculture Secretary Tom Vilsack, in a USDA statement. The funding will go towards providing, “broadband in areas that lack it, help rural-serving public television stations begin using digital broadcasts and support other telecommunications infrastructure improvements."

Jason Meyers with LightReading explains why utility companies (like EPB in Chattanooga) are positioned so well to be home to gigabit networks.  

Several communities are considering local options for networks. Some are just in the earliest study phases: Medina County and Athens in Ohio and Walla Walla, Washington are among them. RS Fiber in Minnesota has approved its updated business plan and financial strategy, meaning it can move forward with its cooperative network, and several communities in Northeastern Oklahoma are pursuing a cooperative plan as well.

It looks like the push for local options in Colorado is having an affect on other communities. Aspen and Pitkin County have submitted requests for proposals-- perhaps inspired by Longmont, Boulder, and the rest of the communities we reported on after the November referenda.  

Meantime, Bruce Kushnick with the Huffington Post reported this week that communities all over the country have been paying for fiber infrastructure upgrades, but have seen almost none of the investment. 

Starting in 1991, the phone companies went state-to-state to get changes in state laws, known as "alternative regulations" to charge customers for the replacement of the copper wires that were part of the state-based utility, like Verizon New Jersey, with a fiber optic wire capable of 45 Mbps in both directions, the standard speed for broadband in 1992.

And though it varied by state, this fiber optic wiring was to be done everywhere -- urban, rural, and suburban, rich and poor communities and cities, and even the schools were to be wired in some states. All customers were paying for the upgrades of this future fiber optic broadband utility so they all deserved to be upgraded.

Check it out and see if your community is on the list. And if you think this isn't the first time you've heard about this Big Ripoff, you're right-- We interviewed him on Community Broadband Bits Episode 28

Net Neutrality

This week, New Jersey's Cory Booker and Maine's Angus King defended net neutrality on CNN. 

The Internet is one of the most powerful tools on the planet. Across the globe, millions of people connect every minute of every day to harness its wealth of information, exchange ideas in an open platform and foster the type of innovation and entrepreneurship that spurs economic growth.

And today, it's never been more at risk in the United States.

Washington Post's Brian Fung reported that there are hints that the telecom industry is preparing for a new Title II reclassification. Verizon's CFO Francis Shammo said, in a nutshell, that the company would do just fine if the FCC imposed the stricter regulations. 

"I mean to be real clear, I mean this does not influence the way we invest. I mean we're going to continue to invest in our networks and our platforms, both in Wireless and Wireline FiOS and where we need to. So nothing will influence that. I mean if you think about it, look, I mean we were born out of a highly regulated company, so we know how this operates.

Despite this very clear statement, we expect to see still more claims from groups like the AT&T puppet Progressive Policy Institute that Title II would somehow cause major carriers to invest even less in networks across the United States. Though, if the market were half as competitive as they claim, any firm that invested less would be in big trouble! How do we know when they are lying? Well, are their lips moving?

Chanute City Leaders Approve Financing Strategy for FTTH in Rural Kansas

Chanute's City Commission passed a motion this month to fund its planned FTTH project with revenue bonds, bringing the entire community closer to fast, affordable, reliable connectivity, reports the Chanute Tribune

In addition to authorizing a plan to secure $18.9 million in revenue bonds, the motion also included funds for a pre-deployment baseline analysis focused on economic development and funds to hire an attorney. The bonds include debt service reserve funds and additional funding to make early interest payments. The plan determines the city will pay off the investment in a little over 14 years, based on a 45 percent take rate.

The Kansas Corporation Commission (KCC) must approve the plan. The KCC is a state regulatory body with a variety of responsibilities, including regulating telecommunications utility rates. The KCC also handles rates for electricity, natural gas, and liquid pipeline services. They handle safety issues, licensing, energy conservation, etc. If the KCC does approve the plan, the bonds can be secured without a public vote unless the city receives any petitions. Chanute still plans on providing residential gig service for $40 per month.

According to the Tribune, 62 percent of 1,030 returned surveys indicated yes or maybe as to whether or not they would be interested in signing up for high-speed service at home or at work; 38 percent said no. City officials are optimistic that the project will blossom even beyond those figures:

“I think once it starts rolling out, a lot of people will see what type of services they’re getting through the city,” [Mayor Greg] Woodyard said, “and they’ll get those bundle packages and we’ll be able to offer them a better product than they’re currently getting at a cheaper price. I think more people will sign up for it in that point in time.”

Woodyard also noted that Chanute is setting an example for other Kansans suffering from poor connectivity:

“A lot of other communities are looking at starting to do this, possibly,” Woodyard said. “We are the trendsetters for the state of Kansas. Everybody’s looking at us to see how we go through the process of doing the fiber project.”

For the complete story on Chanute's network, download our 2012 report Chanute’s Gig: One Rural Kansas Community’s Tradition of Innovation Led to a Gigabit and Ubiquitous Wireless Coverage.

Chanute City Commission Approves FTTH Plan

Chanute City Commission decided on June 9th to take the next step to bring ftth to the community; Commissioners voted unanimously to pursue and finalize funding to deploy a municipal network.

The City's current fiber network provides connectivity to schools, hospitals, electric utility and municipal facilities, the local college, and several businesses. Chanute has worked since 1984 to incrementally grow its network with no borrowing or bonding. Plans to expand the publicly owned infrastructure to every property on the electric grid began to take shape last year.

At a work session in May, Director of Utilities Larry Gates presented several possible scenarios, associated costs, and a variety of payback periods. The favored scenario includes Internet only from the City, with video and voice to be offered by a third party via the network. Residential symmetrical gigabit service will range from $40 - $50 depending on whether or not the subscriber lives in the city limits. Commercial service will be $75 per month. Advanced metering infrastructure will also be an integral part of the network.

The Commission authorized the pursuit of up to $14 million to get the project rolling.

Plan for FTTH in Chanute Looking Positive in Kansas

Chanute has been exploring available options for a citywide FTTH network. In addition to offering residential service, city leaders want to expand the business use of its municipal fiber network. A limited number of businesses currently join schools, government, and utilities on the fiber infrastructure.

The community incrementally built a fiber network to serve government, utilities, and schools with no borrowing or bonding. The broadband utility continues to expand and uses WiMAX for public safety and to connect several businesses. For the full story of this central Kansas community, download our case study Chanute’s Gig: One Rural Kansas Community’s Tradition of Innovation Led to a Gigabit and Ubiquitous Wireless Coverage

As we reported previously, the City Council began reviewing potential scenarios to bring fiber to each premise. The Wichita Eagle reported that Utilities Director Larry Gates recently presented price and speed estimates to a City Council study session:

When complete, the city system will offer service at a speed of one gigabit per second.

City residents will pay $40 a month; it will cost $50 outside the city limits and $75 for businesses.

To put that in perspective, Chanute will offer the same ultra-fast connection speed as the Google Fiber system being rolled out across the Kansas City metropolitan area, but 42 percent cheaper than Google’s $70-a-month charge.

Or, to use another comparison, Chanute’s fiber-to-home system will be 14 times faster and cost 60 percent less than the best Internet service the town’s residents can get today.

Wow! And recall that this would not be possible if the cable lobbyists had their way earlier this year in the Kansas legislature. Kansas briefly considered making it impossible for communities to build their own networks and will likely take up the matter again next year.

We contacted Gates, who elaborated on Chanute's plan. The City will provide Internet only; a third party provider would use the network to offer voice and video. The service area will include the Utilities' three mile territory outside of the city limits.

The community is especially interested in bringing access to unserved students in the community and to patients who need access to telehealth from home. Seventeen percent of area students cannot afford or do not have access to the Internet from home. USD 413 and Neosho Memorial Regional Medical Center are each working with Chanute Utilities to develop solutions using the muncipal network.

Businesses have expressed their frustration with service from the existing cable and DSL service on many occasions. The City's network serves a limited number of commercial clients and others have asked to be connected. City Commissioner Martha McCoy is also a local business owner; she owns and operates a downtown antique and home-decor business. She told the Eagle:

“What I have today (at home), I can hardly ever get on,” she said. “And then I watch the ads they have on TV: Oh, we have super streaming and everything. It just isn’t happening here.”

The service at her business is “better, but it’s still not good,” she said. “It still knocks me off, so I still get upset with that. I have a lot of work to do and I don’t have time to wait.”

The Eagle reports that community leaders supported the initiative at the study session. The City Council formerly votes on June 9th whether to move forward.

In Kansas, Chanute Explores FTTH Options

Last December, we reported on Chanute's decision to move forward with plans for a FTTH network. The community has a fiber and wireless network in place that serves utilities, public facilities such as libraries and schools, and several businesses. The network also provides free Wi-Fi across the community. As we discussed in our 2012 case study, Chanute developed its network incrementally over two decades with no borrowing or bonding.

In a City Commission work session on May 5, officials reviewed several options for an FTTH network. In a nutshell, the City is contemplating their involvement in the operation of the future network.

Utilities Director Larry Gates presented several options, reported the Chanute Tribune. Two choices stood out for the working group members:

Scenario C calls for the build out of city provided fiber optic-to-home broadband internet services. Service drops would only be provided to homes that want the internet services.

Under Scenario C, the initial investment would be about $10,926,842 to build the fiber core. The city would need $9,468,033 in funding to complete the project. The project would become cash-flow positive in two years, one month. It would take five years, nine months to pay back financing for the project. The 20-year net present value for the entire system would be an estimated $40,623,151.

Scenario D calls for a build out of the fiber optic-to-the-home system for private communications companies to pay a fee to the city to lease the network and provide services to residential customers. The city would seek private companies for voice, video and internet services.

Under Scenario D, the initial investment would be about $13,906,416 to complete the build out. The city would need $9,468,033 in funding to complete the project. The project would become cash-flow positive in one year, seven months. It would take eight years, 10 months to pay back financing for the project. The -20 year net present value for the entire system would be an estimated $25,667,301.

Under an altered Scenario D, the City would lease out the network for five years to a private company that would offer triple-play services to residents. At the end of the time period, the City would take over.

Several city officials expressed an aversion to city run video services.

“There is not much profit in video,” Gates said. “Provisioners are pretty much naming the price on that.”

“From a business standpoint, providing video is going to cost us more,” [Mayor Greg] Woodyard said. “We’re not going to be able to see a return on that investment.”

An April Tribune article reported on an outreach meeting held by City Commissioners. Brian Inbody, president of local Neosho Community College shared his experience with the network:

“It is as necessary to us as electricity, water and gas,” Inbody said. “We save about $30,000 year over what we were paying through AT&T to provide that service."

Local schools Superintendent James Hardy also spoke to the value of the publicly owned fiber infrastructure:

“If we didn’t have fiber, we couldn’t have school anymore,” Hardy said. “When we’re buying text books and we have text book rotation, half of what we pay for a text book is web-based material. When those teachers turn on their smart boards that are hooked to a computer, everything they are pulling down is off websites, because everything is web-based.”

At the public meeting in April, commissioners addressed concerns about a five percent franchise fee that commenced in December 2013. The network serves public telecommunications and utility operations and now needs relacement equipment. The franchise the fee will cover the costs.

“We were talking about being short money for equipment,” [Senior City Commissioner Tim] Egner said. “We were trying to figure out a way, without raising mill levies, how to come up with this money. With the franchise fee you’re going out over a larger area. You’re going outside the city. With the franchise fee, you can choose how much electricity you use. You can choose how much gas you use.”

The lack of upgrading maintenance has caught up with the city, Egner said.

“When we cut mill levies,” Egner said, “we had to adjust. We had to stop buying things. We stop putting money back for equipment. At some point that catches up with you. So, we had to figure out the best way to do it.”

The working group will meet again later in May to continue the discussion.

GovTech Reports on Broadband Legislation in Five States

Broadband is a topic of interest in several state legislative chambers this session. In a recent Government Technology article, Brian Heaton focused on five states where community broadband is particularly contentious. In some cases, legislators want to expand opportunities while others seek to limit local authority.

We introduced you to the Kansas anti-competition bill in January. The bill was pulled back this year but could be back next year. When the business community learned about the potential effects of SB 304, they expressed their dismay. From the article:

Eleven companies and trade organizations – including Google – signed a letter opposing SB 304 as a “job-killer” that restricts communications services expansion in the U.S.

Minnesota's leaders introduced legislation to expand broadband. Efforts include financial investment earmarked for infrastructure:

Senate File 2056 – referred to as the Border-to-Border Infrastructure Program – would take $100 million from the state's general fund to be applied to broadband projects. A companion bill in the House, HF 2615 was also introduced.

As we reported, there is bipartisan support for the bill in the House, but the Senate and Governor have not prioritized SF 2056.

New Hampshire's legislature wants to open up bonding authority for local communities that need help:

Legislation is making its way through the New Hampshire Legislature that would give local government expanded bonding authority for areas that have limited or no access to high-speed Internet connectivity. Sponsored by Rep. Charles Townsend, D-Canann, HB 286 passed the House earlier this year and is up for a hearing in the Senate Energy & Natural Resources Committee on April 23.

Heaton also reports on the Utah bill that targeted UTOPIA. The bill concerned potential private partners and appears defeated, but broadband advocates remain alert.

The agency [UTOPIA] has 11 member cities, but communities located outside the limits of member cities can pay to have the network built out to them.

HB 60 would prevent that from happening with specific language that targets only municipal fiber networks – potentially including a Google Fiber rollout in Provo, Utah. That means other forms of broadband such as DSL or cable would be exempt.

Tennessee is especially busy this session. Lawmakers introduced a collection of legislation aimed at enabling local communities to develop community networks. All appear stalled in committee or forgotten by leadership. Heaton spoke to Chris Mitchell about action in Tennessee:

Christopher Mitchell, director of the Telecommunications as Commons Initiative of the Institute for Local Self-Reliance and a national expert on community broadband, told Government Technology that he wasn’t surprised that the bills stalled. He explained that for years, broadband advocates have tried to remove some of the barriers to network expansion in the state, but to no avail.

“The ironic result is that the federal government may be subsidizing obsolete DSL because the state will not allow local governments to expand next-generation community fiber networks even when they are not subsidized in any way,” Mitchell said.

“Many of the elected officials still don't [have] enough pressure on them from constituents to stand up to AT&T and Comcast,” he added. “Those two firms have a lot of power in the [Tennessee] Legislature.”