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Connecticut Focuses on Local Leadership

At the end of March, city leaders across the state of Connecticut converged on a conference to discuss the deficiencies of Internet access and ways to move forward such as a regional network, municipal networks, and public private partnerships. Over the past year, the communities of New Haven, Hartford, and Manchester, have explored several of these possibilities. What pathway they choose depends in part on the outcome of the conference.

The Conference: A Long Time Coming

The conference High-Speed Broadband Infrastructure: A Toolbox for Municipalities took place the state capital Hartford, Connecticut, on March 23, 2016. The presenters, featuring the mayors of New Haven and Hartford, addressed the diverse needs of Connecticut’s communities.

And those needs are many. The Office of Consumer Counsel just released two reports on Connecticut’s connectivity. The first report describes the deficiencies of Internet access in Connecticut. It narrates many of the struggles small, local institutions face in trying to receive adequate Internet service from incumbent providers. The second report recommends a matching grant program for pilot projects based on lessons learned from other states’ programs. 

The conference and reports came out of an initiative called the CT Gig Project. Based out of the Offices of the Consumer Counsel and the Comptroller, the CT Gig Project encouraged communities to coordinate Requests for Qualifications (RFQ) to generate information from private providers about building a statewide, open access, gigabit network. (Chris spoke about the details of the CT Gig Project with Connecticut’s Consumer Counsel Elin Katz and the State Broadband Policy Coordinator Bill Vallee in Community Broadband Bits Episode #118.) In 2014, more than 40 communities joined the initiative that New Haven and Hartford spearheaded. The process ultimately brought the towns together, setting the stage for the conference, but it would not have taken off without the previous work of Manchester over ten years ago.

Manchester’s Old Fight Empowers Communities Today

In the mid-1990s, Manchester became one of the first cities in New England to create citywide fiber network. City leaders utilized a key component of right-of-way (ROW) regulation, the Municipal Gain Law, to quickly deploy fiber throughout the city on the existing utility poles.

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The Municipal Gain Law provides the municipality a position (gain) on each utility pole that is standing in the municipal ROW.

Manchester connected public buildings to one another for internal communication via the “FiberNet”, but still purchased their Internet access through the incumbent provider, SNET (later bought by Frontier Communications). SNET brought the town to court over the Municipal Gain Law. After a fierce legal fight, the case came to a successful resolution in the early 2000s. Now, with the push to improve connectivity for the rest of the state, Manchester is well situated to revisit the possibilities of its “FiberNet.”

According to Chief Information Officer Jack McCoy, Manchester has over 20,000 properties, so a Fiber-to-the-Home (FTTH) project would prove expensive. If Manchester built the network on its own, the economic development potential might make up for the costs. FiberNet already runs throughout the town; bringing fiber to businesses and homes could provide new vitality to the local economy. McCoy suggested the city would consider leveraging FiberNet assets to partner with a private provider. Mayor Jay Moran old us, "All options are on the table."

Hartford: Slow and Steady Wins the Race

While Manchester has been taking its time investigating options, Hartford pushed forward. The state capital and one of most populous cities in Connecticut with 125,000 people, Hartford immediately jumped at the opportunity presented by the CT Gig Project. According to the Office of Consumer Counsel's first report, many in Hartford do not have ready access to affordable high-speed Internet for their homes or businesses even though Hartford is a hub of economic and political activity.

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Incumbent providers have deployed fiber throughout the city but several small businesses have been quoted tens of thousands of dollars for fiber installation. These small businesses have had to get creative to manage. For instance, an incubator space in the Conference of Churches constructed a wireless connection from a State building a half-mile away to receive somewhat adequate speeds. 

Although one of the first to join the CT Gig Project, Hartford maintains realistic timetable expectations. Efforts to get high-quality Internet access into Hartford have slowed as the city administration enters the budgeting season. Chief Information Officer Sabina Sitaru in the consolidated IT department of the city and school system of Hartford explained that, although momentum for the CT Gig project has slowed, the demand for better Internet access still exists. Grassroots efforts are trying to keep up the energy, and the conference bolsters that support.

In New Haven, Ideas and Plans Abound

Much like Hartford, New Haven moved quickly ahead. The city signed onto the CT Gig Project, and the Mayor Toni Harp spoke favorably of an open access network in a 2015 WNHH Community Radio Interview. In fact, by late summer 2015, the New Haven Board of Alders had passed a resolution to explore a feasibility study for a regional network. Community leaders supported the plan, but before the community could commission a feasibility study, an offer to partner with the incumbent got the attention of New Haven's leadership.

In late August 2015, Frontier pitched a public-private partnership through its subsidiary SNET. Frontier had previously purchased the incumbent company SNET in 2014 and had moved the regional headquarters into the city of New Haven. The introduction of the idea of a municipal network, however, changed the conversation around Frontier’s role in the city. This partnership offer, however, did not grow into a viable plan.

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Considering Frontier's horrible reputation with customers, including snaillike speeds and frustrating customer service, New Haven is better off without Frontier as a partner. They have toyed with communities in the past, alluding to partnerships only to eventually back out. In 2007 - 08, Frontier continued to string along Lac qui Parle County as it looked for a partner to develop a County wide fiber optic network. Finally, after a formal request for a partnership from the County went ignored by Frontier, the County decided to work with local cooperative, Farmers Mutual Telephone Company. As customers abandoned Frontier for better connections on the new network, Frontier tried to bully them with steep early termination fees. Read more about it in our 2014 report, All Hands On Deck: Minnesota Local Government Models For Expanding Fiber Internet Access.

There are still many opportunities to close the digital divide and build economic potential, explained New Haven City Controller Daryl Jones. The city is considering offering free Wi-Fi on the green during concerts and may sell advertising to local businesses that will run over the Wi-Fi, possibly as splash pages. A local company in New Haven has been involved in improving Internet access in public housing in New York City -- New Haven may work with them. 

“How do you eat an elephant? One bite at a time.”

Jones repeated that age-old proverb in describing the situation. The problem of slow, unaffordable Internet access does not have a quick and easy fix, but Connecticut won’t stop trying. The two new reports and the conference are just a few more new bites out of this elephantine problem. 

$117,000 Broadband Service Disaster From Charter

Shocking horror stories about incumbent ISPs reaching new lows for poor service are now so common that they have become routine. A story from Ars that recently went viral puts a human face on the frustration millions of Americans endure just trying to determine if Internet access is available where they choose to live. First, here is the gist of the story.

Cole Marshall, a work-from-home web developer, decided he wanted to build a new home on the outskirts of Sun Prairie, Wisconsin. While scouting properties, he confirmed with local incumbent ISPs Comcast and Frontier online and by phone that they could offer sufficient Internet access to his favored lot.

When Marshall completed construction and contacted Charter, the cable company offered to provide the service only if he paid $117,000 to extend their network to his home. And Frontier? Frontier mislead him too, pricing the job at $42,000 to bring him the 24 Mbps service they’d promised they could provide. 

When all was said and done, Charter couldn’t provide affordable service at all. Marshall is now stuck with Frontier’s sloth-like DSL broadband speeds of 3 Mbps download / 1 Mbps upload for all of his small business needs. These speeds fall well short of the 25 Mbps download / 4 Mbps upload the FCC defines as “broadband.” 

Marshall’s story illustrates well the problems with existing broadband services in and around the city of Sun Prairie that led citizens and city leaders to recently pass a resolution to build a municipal broadband network in some areas within the city limits. While Marshall’s address is outside the purview of Sun Prairie’s planned network buildout, the potential for future expansion of this publicly-owned network may be Marshall’s only hope for a solution to his broadband connectivity problems.

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Frontier and Charter officials told Sun Prairie city leaders in June during the network’s planning phase that their plans to build a municipal network were misguided. At that same meeting, Frontier and Charter also warned that they would likely cut jobs if the city chose to build the municipal network.

When Alderman Hariah Hutkowski asked Frontier and Charter officials if they would build a fiber-optic network so the city wouldn’t have to, the incumbents offered no response. Hutkowski called them out:

“What I see is that you will provide just enough to people to make a profit, but our community has other needs, we have demands through schools, residents streaming service, and demand is moving toward higher capacity,” Hutkowski said.

The people of Sun Prairie, a city of about 31,000 just outside of Madison, simply want reliable broadband service from an organization that will operate with basic accountability to its customers. With the private ISPs refusing to provide that service, their pleas to stop a municipal network deployment ring hollow.

Marshall's story highlights at least two problems we see repeatedly across the United States. First, there is highly inadequate or nonexistent broadband service access at non-competitive rates across the country and private ISPs see no financial incentive to help. Second, it underscores common complaints about incumbent ISPs making terrible customer service errors that suspiciously resemble predatory bait-and-switch behavior. Once again, the consumer is caught in the middle as these two problems collide with disastrous results.

Lake County Provides Gap Funding To Keep Project On Track

Lake County has faced a number of challenges since it began deploying its fiber network in 2012. The latest wrinkle comes as the Rural Utility Service (RUS) is late in distributing funds to pay contractors. The agency is administering the stimulus funds used to build the $66 million project. The Lake County News Chronicle recently reported that the County Board of Commissioners will pay $500,000 to cover expenses until federal funds arrive.

The Chronicle reports:

County Administrator Matt Huddleston said the County typically submits financial requirement statements (FRS) to RUS, and the federal agency usually processes the request for funds within 20 days. FRS 15 was filed more than 50 days ago and RUS still hasn't paid the County. A second, more recent FRS has also been delayed.

Commissioners were concerned delayed payments to contractors would further delay the project, scheduled for completion by September 2015.

After the original partner and the County dissolved their partnership and a threat of a lawsuit from Mediacom slowed deployment, Frontier asserted ownership of a number of utility poles within Two Harbors. According to the Chronicle, Lake Connections and the County recently made the decision to bury fiber instead of stringing them on poles as a way to avoid more delays.

Commissioner Rick Goutermont said he was hopeful after speaking to RUS officials on a conference call Monday that RUS would approve the new plan, the project would move forward and RUS would reimburse the $500,000 quickly.

"If we make some kind of movement in the form of some gap financing ... to keep the boots on the ground out there working on it, I believe that would send a stronger message to RUS of our commitment and that we want to move forward," Goutermont said Tuesday.

We documented Lake County's story in our report, All Hands On Deck: Minnesota Local Government Models for Expanding Fiber Internet Access. 

Minnesota's Lake County Fiber Network Begins Connecting Customers

The Lake County fiber network is now serving a limited number of customers in northern Minnesota. According to the Lake County News Chronicle, the network's triple-play services are lit and bringing better connectivity to Silver Bay and Two Harbors.

About 100 customers in Silver Bay take service via the network; beta testers in Two Harbors are helping Lake Connections, the entity managing the network, straighten out any kinks in Phase One. Phase Two, which is more than 60% complete, will bring service to Duluth Township, Knife River, Silver Creek Townships, and Beaver Bay Township. Phase Two is scheduled for completion this summer; Lake Connections anticipates network completion in the fall of 2015.

The Lake County project has been plagued with problems, including delays cause by incumbents. Mediacom filed complaints with the Inspector General based on unsound allegations. While the cable company was not confident enough to sue, its accusations wasted time and money for Lake County. Frontier asserted ownership of a significant number of Two Harbors utility poles, even though the City has maintained them, and the two are still involved in negotiations over ownership and fiber placement on the poles. The Minnesota Cable Companies Association (MCCA) delayed the project further by submitting a massive data request.

The FTTH project is one of the largest stimulus projects, totaling approximately $70 million in grants, loans, and local matching funds. The project will cover almost 3,000 square miles when complete, connect almost 100 community anchor institutions, and provide services to over 1,000 businesses.

As we have noted before, the project was sorely needed. On more than one occasion, a single fiber cut to the area created Internet black outs to homes, businesses, hospitals, government, and any other entity depending on connectivity to function.

In Two Harbors, outdoor equipment supplier Granite Gear is on the new network. In the past, the entire company shared one DSL connection, forcing the company art director to work at night when bandwidth was available. Now, everyone works normal hours. From the article:

Dave Johnson, the strategic accounts manager for the 28-year-old company, said fast internet has become essential to Granite Gear in recent years.

“It’s not just nice having faster internet, but it has become an absolute necessity,” he said.

“Business is not just pushing emails back and forth. We maintain a website,” he said. “Doing business has become real bandwidth intensive.” A new technological era has dawned and companies are evolving to keep pace with their competitors.

Granite Gear Logo

Johnson told us via email that uploading files for customers in the past used to take hours but now the task takes a few minutes and does not disrupt service for other employees.

Delays have created extra expenses and Lake County will need more customers like Granite Gear to make the network strong. According to the article, the County has already started making loan payments:

[County Commissioner Rich] Sve said he understands his constituents’ concerns that the network may not be viable.

“I share that concern as a taxpayer. I think it’s legitimate,” he said.

But, he added, private companies have not stepped forward to provide the service, despite encouragement by federal and state government to do so. The county, therefore, opted to undertake the task.

“So far, we’re pleased with what we’re getting in Silver Bay and hopeful that it continues,” [Lake Connections Project Manager Jeff Roiland] said.

Businesses and residents interested in signing up for service from Lake Connections can contact them today to make arrangements:

“The biggest thing to do is contact our staff,” Roiland said. “They can call in (or) walk in and the gals at the office can explain to them what to do.”

Catching Up with the RS Fiber Coop in Minnesota - Community Broadband Bits Podcast #99

In the nearly two years since we launched this podcast with an interview from Minnesota's rural Sibley County, the project has evolved significantly but the need for better Internet access remains a constant.

Today, we interview Coop Vice-Chair Cindy Gerholz and Winthrop Town Manager Mark Erickson to get an update on the fiber-to-the-farm project. The Renville-Sibley Fiber project has transitioned from a municipal project to a cooperative. Local towns and a sizeable majority of townships will together issue an economic development bond to provide seed capital to the coop.

We discuss the project, financing arrangements, and the need to make sure that no one is left behind. Stay up to date with the project on their website and Facebook.

Read the transcript from our discussion 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 20 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.

Find more episodes in our podcast index.

Thanks to Valley Lodge for the music, licensed using Creative Commons. The song is "Sweet Elizabeth."

Sun Prairie Ponders Fiber Network Investment in Wisconsin

The Sun Prairie City Council met on January 14th to discuss a possible investment in a municipal fiber network. Thank you to local resident Jonathan Kleinow for alerting us to developments in the south central Wisconsin town.

The Star published an article about the meeting in which The Motive Group presented information to the Committee of the Whole. According to the story, the consulting firm has been working with Sun Prairie Utilities for a year to find ways to improve local connectivity and spur economic development with fiber. The community is considering the possibilities of a triple-play FTTH network for the areas 30,000 residents.

Sun Prairie Utilities solicited responses to a community survey. They received 700 responses with 88% in favor of a fiber investment. 

From the article:

The recommended plan put for[th] by The Motive Group has a total cost of near $27 million, with $21 million of that as year-one capital expenditures to serve roughly 13,550 homes and businesses in the city.

Budgeted in the initial year's expense total is $11 million for aerial and underground construction and equipment.

Once the fiber system is operational and available for customers, [The Motive Group's Beth] Ringley said projections show $9.97 million in annual operating revenue by year 20 of the system to go along with expenses of $1.26 million.

By year 20, total assets are projected to be at $27.16 million, with total cash at $12.56 million.

Councilman Jon Freund commented that he was opposed to the idea at first but that he now believes Sun Prairie Utilities and the City could partner to distinguish the community. From the article:

“Technology has become a greater and greater need for both businesses and residents,” Freund continued. “This is an opportunity for us to basically differentiate Sun Prairie from all the other communities in Dane County.”

...

He added that fiber installation would “put Sun Prairie on the leading edge” for economic development and local and long-distance education opportunities.

Sun Prairie Wisconsin Logo

The Star also reported on Jaunary 25th that city officials want to provide ample opportunity to incumbents:

“The worst they can say is ‘No’ and we say ‘Thank you for your time‘ and we come back to this body and say we've ruled that out,” [Mayor John] Murray remarked.

Freund said he and others spoke Tuesday with Frontier representatives and the provider expressed little interest.

“It was a good conversation and certainly as we looked at partners they would be the most likely partner in the community, but it was pretty clear that they weren't interested in taking this project on themselves and providing us this service at no cost to the city,” Freund said.

City Council members plan to reach out to the people of Sun Prairie through informational meetings. The first is scheduled for March 4th.

“My hope is that we continue to put additional information out over the next month to continue to educate the public,” Freund said.

Sun Prairie is located about an hour southeast of Reedsburg, where the community has benefitted from a community network since 1998. Reedsburg recently began offering gigabit service for less than $300 per month.

A local news story notes that an existing beer distributor is already using the utility's fiber and it has been important to its business:

Pole Issue Means More Delay For Lake County Project

Lake County, a rural area on the north side of Minnesota's portion of Lake Superior, has long suffered with just dial up and satellite, with slow cable connections available in some of the towns. After receiving a stimulus project to build a county-owned FTTH project connecting everyone, many thought their broadband troubles were over.

But Mediacom attacked first, with unsubstantiated allegations of rules violations that investigators found to be lacking in merit. When Mediacom announced it would not further delay the project with a lawsuit, we again thought the project would proceed. 

But now a dispute over who owns some of the poles is holding up the project. The Lake County News reports that Frontier  asserts ownership of some poles on which aerial fiber optic cables sit as the project nears completion of Phase One. From the article:

There have been questions over the ownership of these poles in recent weeks. The poles, many of which Lake Connections has already utilized for attaching fiber, are within Two Harbors city limits. Frontier, a telecommunications provider in Lake County, said Lake Connections connected to their poles without submitting permit applications.

In an earlier report (reprinted here on mobilitytechzone.com and edited to include comments from Frontier), Mayor Randy Bolen declined to take an official position on the dispute between Frontier Communications and the install company, Lake Connections.

According to that October 25th report, there was a pole agreement between the two, but the agreement did not approach the issue of pole ownership. Rather than bring up the issue during negotiations, Frontier has waited until now to raise the challenge. Also from the article:

Jeff Roiland, project manager for Lake Connections, said the city has been maintaining the poles in question for years and wonders why ownership is an issue. Two Harbors Mayor Randy Bolen conceded that the city has been maintaining and replacing the poles as needed, but he said the question of ownership never came up before the fiber project. Frontier said they didn't authorize this city-performed maintenance on their poles.

This is yet another case where ownership is important. Whoever owns the poles calls the shots. In communities where a public power company operates, the public owns the poles and can avoid difficulties in attaching radios or fiber. But where the poles are owned by another entity, as with Frontier, the community has to obtain permission to attach radios and fiber.

Frontier Logo

And after permission is obtained, the community often has to wait. Because attaching new things to poles sometimes requires other things to be moved to create the space, a process called "make ready." Companies like AT&T have long used the power over the poles to delay and harm competitors -- not by stopping them outright, but by charing high make-ready costs and taking a very long time to complete the process.

Frontier is also upset about where the fiber has been placed. From the same article:

Frontier has also challenged hierarchy, which determines where lines from different services are strung on poles. [Frontier Communications general manager in Northern Minnesota Kirk] Lehman stated that Lake Connections attached to their poles "without following industry standards that specify where the facilities of different entities are to be attached." Roiland said ownership must be determined before hierarchy can be challenged.

Though we are not about to take Frontier's word that Lake County violated any standards, it does raise another interesting point. The lowest wire on the poles is the first to be snagged by trucks or otherwise torn down in the event of accidents. So no operator wants to be the lowest line on the poles -- being higher on the pole means fewer interruption and lower operating costs.

In Minnesota, Rural Fiber to the Farm Project Expands

A rural Fiber-to-the-Farm project that started in Sibley County has added three new towns to its potential territory due to the extremely high interest in fast, affordable, and reliable connections to the Internet. The current providers aren't getting the job done and few expect that to change given the cost of improving services.

An article last year reported on present difficulties for many in Sibley:

Soeffker, who farms with her husband in rural Sibley County, said the dish receiver they must use works fine in good weather but balks during heavy rain and snowstorms.

Meantime, her husband struggles with a lagging Internet speed of .6 megabits a second that falls short of meeting his business needs when he’s selling commodities.

The committee organizing the network set a goal for demonstrating the interest of something like 50% of the population in the target area. There has been some confusion as to exactly how many they should have before committing to the project but with just two mass mailings, they have received nearly 3,000 positive responses (of the over 8000 households that could be served). This is a very strong response.

To keep the public informed, they have had numerous public meetings in each of the communities that will be involved. To be as open as possible, they would often have three meetings in a town per day -- a morning, afternoon, and evening meeting to accomodate everyone's schedule. As this project moves forward, no one can claim the group has been anything but open with the plan.

On January 19, they had a major meeting with over 100 people attending, including many elected officials from the towns. For over two and a half hours, they had five presentations and numerous questions. MPR's Jennifer Vogel was there and wrote about the project shortly afterward.

Participating communities--which include Renville County, Sibley County, Fairfax, Gibbon, Winthrop, Gaylord, Arlington, New Auburn, Green Isle, Buffalo Lake, Steward, Brownton and Lafayette--have been asked to decide by early March whether to continue with the project and release additional funds for marketing and administration.

Previously, the project included 7 potential towns. But some nearby towns in Nicollet County have expressed interest in joining and their density would make the project more viable. Most in Sibley have been dedicated to serving every household - town and farm alike. While the principle of equity is noble, it ultimately makes the project harder to finance due to the higher fixed costs required to serve the least dense areas. Bringing in a few more towns benefits everyone.

Unfortunately, the people around the those towns are frustrated that they are not slated for connections in the current plan -- see some of the discussions on their vibrant facebook page. They will have to draw the line somewhere but will undoubtedly be interested in expanding the network once they have built out in initial territory.

Minnesota law has a barrier to municipal networks and as a matter of law, it is not clear that it applies to a county-owned project. Under law, if a municipality wishes to own or operate a telephone exchance, it must have a successful 65% referendum -- an incredibly high bar given the imbalance of spending power in such contests. Incumbent providers can spend a lot to oppose a referendum whereas local governments cannot take a position and grassroots groups are limited in their financial resources.

Renville Sibley Fiber Network

However, as this network plans to neither own nor operate a telephone exchange, it should not have to pass a referendum. It seems as though the project is leaning toward a partnership with Hiawatha Broadband Communications, a well liked private firm from southeastern Minnesota. HBC already operates the muni-owned Monticello FTTH network.

While no financial plans are yet finalized, the most likely option appears to be non-recourse revenue bonds for nearly $70 million. These are bonds that are issued to private investors and will be repaid with revenues from the subscribers. If the network were to fail to produce enough revenue to make the debt payments, the towns and county would have the option of making up the difference from tax revenues but would be under no obligation to do so.

From Jennifer Vogel:

There would be some public obligation to the project, in the form of what McGinley called a "debt service reserve fund." In order to make the project appealing to investors, he said, the participating communities would be required to establish and replenish if necessary a $4.5 million rainy day fund that would cover any shortfalls. They also would have to cover the contributions of any communities that ducked out of the project down the road or couldn't pay into the fund.

If one town, Winthrop for example, decided not to ante up for the debt service reserve fund, other communities could cover the difference. As the network generates net income (perhaps 5-6 years down the road), the money comes back proportionally to those towns that created the reserve fund.

It bears noting that these people are not asking for any handouts. Whereas Frontier and other providers in the towns are incredibly unlikely to expand their networks absent taxpayer subsidies, the Sibley County Fiber Project will be locally self-reliant.

Legislation Alert: Washington Considers Community Broadband Bill

Last year we noted that a bill to expand local authority to invest in publicly owned broadband networks would return in 2012. HB 1711 is in Committee and causing a bit of a stir. "A bit of a stir" is good -- such a reaction means it has a chance at passing and giving Washington's residents a greater opportunity to have fast, affordable, and reliable access to the Internet.

Washington's law presently allows Public Utility Districts to build fiber-optic networks but they cannot offer retail services. They are limited to providing wholesale services only -- working with independent service providers to bring telecom services to the public.

Unfortunately, this approach can be financially debilitating, particularly in rural areas. Building next generation networks in very low density areas is hard enough without being forced to split the revenues with third parties.

Last year, House Bill 2601 created a study to examine telecommunications reform, including the possibilty of municipality and public utility district provisioning. The University of Washington School of Law examined the issues and released a report [pdf] that recognizes the important role public sector investments can play:

U Washington Law School

Broadband infrastructure is this century’s interstate highway system: a public investment in an infrastructure that will rapidly connect Washington’s citizens statewide, nationally, and internationally; fuelling growth, competition, and innovation. Like highway access, the path to universal broadband access varies with the needs of the local community.

Our primary goal is to expand broadband access. We believe allowing municipalities and PUDs to provide broadband services addresses the most significant hurdles to broadband expansion: the high cost of infrastructure. In conjunction with a state USF, PUDs and municipalities are well placed to address the needs of their consumers.

A secondary goal is to promote a competitive marketplace. We believe that empowering PUDs and municipalities will spur competition which will drive innovation and improved service.

The analysis recognized the weakness of those arguing that only the private sector should be allowed to build this essential infrastructure:

To be successful private providers need to be able to generate profit for their shareholders. However, when an effective competitive marketplace does not exist, private providers only have a weak incentive to expand access to broadband services. In fact, the scarcity of service justifies the collection of high rates from users. In Washington’s urban areas, the barriers to entry are so high that incumbent providers have little trouble keeping new providers from entering the marketplace. Qwest (soon to be CenturyLink) and Comcast, merely vie for existing users, rather than expanding the overall number of ratepayers. In contrast Washington’s rural areas are characterized by low population density and large geographical distances between communities. The lack of concentrated business consumers in a given area translates into weak or non-existent business case for providers to build broadband infrastructure in rural areas. Arguably, rural areas are poised to reap the biggest rewards from broadband expansion, quickly integrating communities into existing networks of private and public service.

Chelan PUD

Not all public utility districts are pushing for this law to be changed. I asked the Chelan Public Utility District (one of the oldest and largest public services providers in the state, which we have previously covered here) about their position on the legislation. Chelan is not interested in offering retail services but does not oppose changes that would allow other PUDs to do so. They rightly oppose any law that would require PUDs to offer retail services -- something with which we strongly agree. State legislatures should not be telling communities what business model they have to use.

Getting back to HB 1711, it is presently in the Technology, Energy, and Communications Committee. The bill's author, Representative John McCoy has taken the arguments of opponents into account by limiting the impacted public utility districts to those in a county with 300,000 people or fewer. To build a network and offer retail services, a public utility district (or rural port district) would have to gain the approval of its governing board after a public meeting and be subject to state regulation for the services it offers.

The original bill also granted the authority to municipalities to build retail networks -- a right that munis appear to have presently but it is not clear (inviting expensive litigation from big anti-competitive providers). That provision has been removed from the present bill.

Opposition

The bill's opponents may be separated into two groups. The first is the usual gang of big, absentee corporations like CenturyLink, Frontier, and Comcast that typically oppose any legislation that could create competition to their services. They have a ton of lobbying power and very little desire or capacity to solve the rural broadband problem in Washington state.

The second group is more interesting. It is a collection of local businesses that are actually rooted in the community. Many are ISPs that operate on existing wholesale-only networks owned by public utility districts. They are afraid of either being kicked off the network or having to compete against the PUD itself in provisioning services. These are certainly legitimate fears.

Unfortunately, the small providers are also limited in the capacity to build the necessary networks needed to bring modern connections to everyone in the state. Offering service on an existing PUD network requires far less capital than building their own network. If the state wants to move toward a Washington where all residents and businesses have fast, affordable, and reliable access to the Internet, it has to risk upsetting the small ISPs. They do not have the capacity to connect rural Washington; the public utility districts and local governments have not just the capacity, but also the responsibility. It is time for the state to stop making it all but impossible for them to do so.

Get Involved

Local communities must have the freedom to build the networks they need without interference from federal or state capitals. Quoting from the Federal Communication Commissions' National Broadband Plan: "Congress should make it clear that Tribal, state, regional, and local governments can build broadband networks."

This bill will not succeed without a grassroots effort. People in Washington should contact their representatives (you can find them here), particularly those on the Committee:

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Representative Room Phone
McCoy, John (D) Chair LEG 132A (360) 786-7864
Eddy, Deb (D) Vice Chair LEG 132D (360) 786-7848
Crouse, Larry (R) * LEG 425A (360) 786-7820
Short, Shelly (R) ** JLOB 436 (360) 786-7908
Anderson, Glenn (R) LEG 122A (360) 786-7876
Billig, Andy (D) LEG 122H (360) 786-7888
Carlyle, Reuven (D) JLOB 325 (360) 786-7814
Dahlquist, Cathy (R) JLOB 426 (360) 786-7846
Haler, Larry (R) LEG 122D (360) 786-7986
Harris, Paul (R) JLOB 427 (360) 786-7976
Hasegawa, Bob (D) JLOB 322 (360) 786-7862
Hudgins, Zack (D) LEG 438A (360) 786-7956
Kelley, Troy (D) JLOB 334 (360) 786-7890
Kristiansen, Dan (R) LEG 427A (360) 786-7967
Liias, Marko (D) JLOB 414 (360) 786-7972
McCune, Jim (R) JLOB 405 (360) 786-7824
Morris, Jeff (D) LEG 436A (360) 786-7970
Nealey, Terry (R) JLOB 404 (360) 786-7828
Wylie, Sharon (D) JLOB 417 (360) 786-7924

Former FCC Commissioner Copps recently said, "So it is regrettable that some states are considering, and even passing, legislation that could hinder local solutions to bring the benefits of broadband to their communities. It's exactly the wrong way to go."

Washington is smart to expand local authority in this matter. Local citizens are the best judge of whether a network is necessary and desirable as well as the most responsible business model.