community broadband networks

In late April, LD 1185 and several other broadband bills came before the Maine House Energy, Utilities, and Technology Committee. We have seen a flurry of activity in Maine this year as local communities deploy networks, develop plans, or begin feasibility studies. Likewise, the state legislature has been active as House and Senate members try to defibrillate the barely beating heart of the state listed as 49th for broadband availability.

The national providers in Maine - Time Warner Cable and FairPoint have little interest or capacity to invest in high quality services in Maine. Time Warner Cable is more focused on major metros and being acquired. FairPoint is laying off workers and also, positioning itself to be acquired. Fortunately, these big companies aren't the only option for improving Internet connectivity in Maine.

LD 1185, presented by Representative Norm Higgins, seeks to establish $6 million this year in funds for local communities that wish to deploy municipal networks. Maine already has the middle mile Three Ring Binder in place; the focus of this proposal is to help communities get the infrastructure they need to connect to it. In an effort to get the word out about the bill and grow support, Higgins and his team created this graphic explaining the proposal (a 2-page printable edition of the graphic is available for download from the link below):

According to a recent Legislative Bulletin from the Maine Municipal Association, LD 1185 and LD 1063, which redirects ConnectME towards issuing planning grants, appear to have the most traction of all the Maine bills. Testifying in support of both bills were the Maine Office of the Public Advocate, the ConnectME Authority, the University of Maine, Great Works Internet, Maine Fiber Company, the AARP, and the Coastal and Island Institutes. The Mayors' Coalition, and community officials from Rockport, Isleboro, South Portland, and Orono also testified in favor of the bills.

From the Office of the Public Advocate's Testimony on LD 1185:

The bill proposes to provide municipalities with matching grants to fund broadband planning efforts, and provide technical support to those communities. Providing this kind of assistance to communities is important to ensuring that those communities make informed decisions regarding use of public funds for broadband investment. The bill offers several novel and useful concepts not seen in other legislation that are particularly promising.

As can be expected, Verizon, Fairpoint, Time Warner Cable, and the Telecommunications Association of Maine testified in opposition.

Last week, the Vermont Department of Public Service began a series of public hearings on the public comment draft of its State Telecommunications Plan. The plan is intended to asses the current state of the telecom landscape in Vermont, map out goals and benchmarks for the next 10 years, and provide recommendations for how to achieve them. The plan sets a target of 100 megabit per second symmetrical connections for every home and business in the state by 2024.

Oddly enough, achieving that even today would put them behind many metropolitan areas across the United States. The technology needed to deliver 100 Mbps connections is essentially the same that would be used to deliver 1 Gbps, begging the question why such a limited goal?

The 100/100 mbps symmetrical target is for 10 years into the future, but in the nearer term the plan calls for universal 4/1 Mbps coverage, raised to 10/1 Mbps coverage by 2020. While it may at first glance seem reasonable to set gradually rising targets, these long and short term goals actually have the potential to conflict with each other.

As pointed out by Vermont Public Radio, the 100/100 Mbps standard would likely require universal FTTH, or at least fiber to the node combined with other technological advances and investments. Meeting this goal would require a huge investment in next generation fiber optic infrastructure, yet the Telecommunications Plan calls for funding priorities to be focused on achieving universal 4/1 mbps coverage for the next 6 years. This lower standard will likely be met with a combination of last generation technologies like copper wire DSL and wireless that are incapable of meeting the 100/100 standard.

Continuing to build out older systems while deferring investments in fiber, which is adaptable to meet just about any future need, seems illogical. It’s a bit like saying you’re going to put all your expendable income for the next six years into repairing your VCR and buying tapes, while promising you’ll buy a DVD player immediately after. 

While the goal of first guaranteeing all Vermonters some basic level of coverage is admirable, Vermont can do better by setting higher goals for itself. However, a real plan would require Vermont to actually invest in better connections rather than continuing to award grants to pokey incumbent providers like Comcast and FairPoint.

Leslie Nulty, a former Project Coordinator with the locally-owned, open access EC Fiber Network in the eastern part of state, put it best in her scathing criticism of the plan:

The long-range vision is admirable, but unfortunately the plan has no guidance at all as to how to reach it. It’s near-term guidelines, on the other hand, assure that current public policy will hinder, if not completely block, achievement of the long-term “Vision.”

Another concerning piece of the Plan is its decidedly skeptical attitude toward public networks, or anything that deviates from the standard playbook of offering grants to incumbent provider to entice them to build. From page vii of the Telecommunications Plan:

7. Vermont policy makers should carefully consider the potential negative outcomes of state and municipalities directly competing with private firms in the provision of telecommunications services, especially in areas where consumers are adequately served. Vermont should refrain from policies, including financial incentives, that have the net effect of diminishing competitive choice in the marketplace.

There is no evidence that municipal networks diminish competititon while there is plenty of evidence that municipal networks have resulted in more competition and increased investment from incumbent providers. The idea that more competition results in less competition is worthy of an explanation from George Orwell. 

“Competitive choice” is another goal that sounds good, but in this context it is used primarily to discourage investment in local networks that allow communities to determine and meet their own needs. To communities that have limited or no broadband access, this in effect announces that the state has little interest in helping them build their own networks, they should just sit tight until they get an already obsolete 4/1 mbps connection from a private provider, subsidized by the state, sometime around 2017 or 2018. 

On the whole, this Telecommunications Plan offers minimalist requirements for “basic” broadband that are already obsolete, and completely ignores other important measures of quality connectivity, such as latency. It offers essentially no new funding to back up its promises, with only vague mentions of tapping “public and private sources” while using existing revenue streams to invest in meeting outdated standards through private providers. The list of recommendations mostly read like an endorsement of the status quo, which stands at odds with the headline grabbing pronouncements of long-term goals. In short, it seems like a plan designed to have the most public relations impact with the minimal expense of political, financial, or even intellectual capital. 

For a more detailed breakdown of the Vermont Telecommunications Plan’s failings from someone more versed in the local landscape, read the full testimony given by Leslie Nulty [pdf] at a public hearing on the issue. She touches on all the issues mentioned above and a variety of others, from the plan’s lack of support for open access network models to new funding mechanisms preferable to grants to incumbents, such as revolving loan funds to finance network buildouts. 

It's a new year, but most of us are still stuck with the same old DSL and cable monopolies. Though many communities have built their own networks to create competition and numerous other benefits, nearly half of the 50 states have enacted legislation to make it harder for communities to build their own networks.

Fortunately, this practice has increasingly come under scrutiny. Unfortunately, we expect to see massive cable and telephone corporations use their unrivaled lobbying power to pass more laws in 2012 like the North Carolina law pushed by Time Warner Cable to essentially stop new community broadband networks.

The FCC's National Broadband Plan calls for all local governments to be free of state barriers (created by big cable and phone companies trying to limit competition). Recommendation 8.19: Congress should make clear that Tribal, state, regional and local governments can build broadband networks.

But modern day railroad barons like Time Warner Cable, AT&T, etc., have a stranglehold on a Congress that depends on their campaign contributions and a national capital built on the lobbying largesse of dominant industries that want to throttle any threats to their businesses. (Hat tip to the Rootstrikers that are trying to fix that mess.)

We occasionally put together a list of notable achievements of these few companies that dominate access to the Internet across the United States. The last one is available here.

As you read this, remember that the FCC's National Broadband Plan largely places the future of Internet access in the hands of these corporations. On the few occasions the FCC tries to defend the public from their schemes to rip-off broadband subscribers, Republicans (joined by a number of Democrats) threaten to overrule what is supposed to be an independent agency to defend the corporations that just happen to be donors to their campaigns.

Back when most assumed AT&T would be able to push its horribly anti-competitive takeover with T-Mobile through an impotent federal government, a few stories exposed the tip of the iceberg of AT&T's astroturf efforts, as with this report from the Center for Public Integrity:

“It is important that we, as Christians, never stop working on behalf of the underserved and forgotten,” the Rev. R. Henry Martin, director of the clinic, wrote to FCC Chairman Julius Genachowski in June. “It might seem like an out-of-place endorsement, but I am writing today in order to convey our support for the AT&T/T-Mobile merger.”

...

Not included in Martin’s letter to the FCC was the fact that his organization had received a $50,000 donation from AT&T just five months earlier. Indeed the Shreveport-Bossier Mission is one of at least two-dozen charities that were recipients of AT&T’s largesse and have written in support of the T-Mobile buyout, which will cut the number of national wireless companies from four to three.

When AT&T's wasn't able to buy enough influence with legitimate groups willing to sell out the interests of their members (who would pay more for their communications in a less competitive environment), it would simply create its own groups to push its interests:

Tallahassee Mayor John Marks brought an Atlanta nonprofit to the city as a partner in a $1.6-million federal-grant project, saying it would put high-speed Internet into the hands of poor people.

What he didn't say, and now says he didn't know, was that the Alliance for Digital Equality (ADE), in its first three years of existence, was nearly 100-percent funded by AT&T and spent most of its money — four of every five dollars — to pay board members, consultants, lawyers and media companies to push the global communication giant's positions on Internet and wireless regulation. Nor did Marks disclose, initially, that ADE had paid him $86,000 over several years as a member of its board of advisers.

We continue to see these massive companies abuse their market power to increase their prices, knowing that their lobbying arms will continue pushing legislation to stop communities from building their own networks.
Time Warner Cable hiked its rates in North Carolina immediately after passing its legislation to stop communities from building networks. Mediacom raised its prices while it attempts to sabotage efforts in rural Minnesota to build networks in unserved areas. And invented new fees to rip off its subscribers while trying to disrupt a rural fiber-to-the-farm initiative that slightly overlapped some territory in which they have long refused to invest.

Even as profits on cable broadband services approach Exxon proportions, Time Warner Cable has pushed for usage-based pricing to further overcharge subscribers, but mostly to strangle enormously popular competitors like Netflix. CenturyLink is not far behind, with usage caps prioritizing its own video content over competitors.

Verizon Wireless tried to sneak a new fee past subscribers by announcing it just before Christmas but backed down after outraged consumers reacted. One has to wonder whether it would have backed down in a world where AT&T took over T-Mobile, resulting in 3 out of 4 wireless customers being with Verizon Wireless and AT&T. Four competitors isn't the robust competition envisioned by Adam Smith, but it still beats the duopoly dynamic that results from even less competition.

Speaking of less competition, the recent deal between Verizon and cable companies is troubling. We already knew that FiOS was all but dead, but this deal truly puts a fork in it:

I'll assume that neither cable operators or Verizon are going to let us see the deal fine print to confirm the Times guess, but the logic fits Verizon's strategy. Verizon already cherry picked the most valuable FTTH upgrade markets, and has shown total disinterest in further upgrades. This deal allows them to save money on FTTH upgrade costs, instead soaking up remaining customers with LTE -- which we noted was the plan some time ago. This deal is very bad news to the rural telcos without the cash for large-scale upgrades (CenturyLink, Frontier, Fairpoint, two of which Verizon sold aging DSL networks to), and for satellite broadband providers.

The future of next-generation networks is now only community networks, cooperatives, and some small private networks.

We've long argued that phone and cable companies have systematically overstated their coverage in mapping efforts as part of their effort to blunt any sensible public policy that would result in all Americans having a choice between fast, affordable, and reliable connections to the Internet. The New England disaster called FairPoint is back in the news for overstating the number of subscribers that have access to DSL. The company has not met the requirements it agreed to when purchasing Verizon's lines a few years ago.

And in the continuing saga of Comcast's growing domination over the information people can access, Bloomberg TV is fighting Comcast's practice of discriminating against channels in which it has no ownership stake. Comcast has long strongly encouraged those who want to put television channels on its lineup to give Comcast a piece of the action, not unlike a mobster encouraging a small business to pay protection money. It wants to continue expanding its role as a gatekeeper to the Internet, particularly in the many areas where people have no real choice from other high speed providers.

And perhaps the best example of why we should not trust these massive corporations to run essential infrastructure is the revelation that AT&T defunded 9-11 call centers in Tennessee to gain a market advantage over competitors, a practice they were previously caught doing, leading to settlements out of court.

These corporations are not evil, they are following a sensible mandate to maximize their shareholder value. It is our government that is not sensible -- entrusting them with the future of Internet access without even bothering to enact the most basic regulations. Communities must continue to wise up and ensure they have the access they need to modern communications -- access that reponds to their needs, not those of distant shareholders.

When it comes to expanding access to the Internet across the US, the federal government has long looked first to the private sector, ignoring hundreds of years of experience showing that unaccountable private companies cannot be trusted to sufficiently invest in or govern essential infrastructure.

Inevitably, they price access to high and invest too little as they maxmize their profits -- thereby minimizing the profits of all other parts of the economy.

So let's take a little survey of the progress we see from these companies.

We have long railed against the Verizon -> FairPoint fiasco in New England that left Verizon much richer at the expense of residents and businesses in rural Vermont, New Hampshire, and Maine particularly. Well, FairPoint creditors have realized the depth of Verizon's scam and are suing Verizon for $2 billion. Read the complaint [pdf].

According to the complaint (pdf), Verizon not only made out like a financial bandit up front, but took advantage of regulatory delays to strip mine the assets of anything of value, including core IP network components, business services, and localized billing and support assets required to support the three states. Verizon then billed out their support assistance for millions per month during the very rocky transition, during which time 911 and other services saw repeated outages, resulting in millions more in refund penalties.

Karl Bode is right to criticize the state authorities that allowed this fiasco to occur. Their inability to regulate in the public interest has hurt everyone stuck in the mess. While we can expect powerful companies like Verizon to try to game the system at every opportunity, there is no excuse for making it so easy for them.

As long as we are talking about Verizon shedding its rural investments, let's take a look at how Frontier is doing since it inherited thousands upon thousands of FiOS customers as part of its recent deal with Verizon. Frontier has decided the best approach is to transition those customers from the next-generation FTTH network to an older, slower, less reliable, DSL alternative. Find me another country where a major company is moving customers away from fiber-optic connections. This is a national embarrassment.

Rather than investing in better technology, Frontier has literally doubled down on DSL by marketing a second DSL line to customers. Connect one computer to one line and the TV/video game unit to another one. Of course, it turns out they are lying (or incompetent) when it comes to how much they are charging for it...

In other words, that $13.50 1.5 Mbps (if you're lucky) DSL line is actually closer to a $50 1.5 Mbps DSL line once Frontier gets done slamming you with additional fees. These kinds of below-the-line fees have been a mainstay at phone companies for decades, essentially allowing them to engage in false advertising and covertly jack up the advertised price post sale. It's a practice that has yet to see any real attention of regulators, even those ceaselessly professing dedication to "transparency." It helps that Frontier serves a lot of uncompetitive markets where users have no other options, resulting in "deals" like this one.

Let's move on to the nation's largest cable company, Comcast. We recently noted Comcast's dubious distinction as the least trusted company in America. It was simultaneously the second least trusted. I'm guessing we won't see that award plastered on the side of the vehicles their poorly compensated contractors drive around.

Occupy Philly, the City of Brotherly Love offshoot of Occupy Wall Street, recently demonstrated at the Comcast Center to bring attention to Comcast's corporate tax dodging. Hey -- I thought Comcast routinely said it wasn't fair that non-profit entities don't pay taxes!

Finally, the big cable companies in general have been singled out in a study showing that Americans lost $38 billion in wages last year while waiting for technicians and delivery people. Cable companies were the worst at making people wait - prompting one person to say "SCAMCAST should be their name."

There is plenty more of examples like the above, but I'm done writing about them today. Just recall that the federal government prefers that this group of unaccountable corporations build, own, and operate the most important utility of the 21st century. We prefer local ownership that is accountable to communities. Time Warner Cable has actually been sued for its terrible customer service!