Tag: "seattle"

Posted January 9, 2014 by christopher

This the second in a series of posts exploring lessons learned from the Seattle Gigabit Squared project, which now appears unlikely to be built. The first post is available here and focuses on the benefits massive cable companies already have as well as the limits of conduit and fiber in spurring new competition.

This post focuses on business challenges an entity like Gigabit Squared would face in building the network it envisioned. I am not representing that this is what Gigabit Squared faced but these issues arise with any new provider in that circumstance. I aim to explain why the private sector has not and generally will not provide competition to companies Comcast and Time Warner Cable.

Gigabit Squared planned to deliver voice, television, and Internet access to subscribers. Voice can be a bit of hassle due to the many regulatory requirements and Internet access is comparatively simple. But television, that is a headache. I've been told by some munis that 90% of the problems and difficulties they experience is with television services.

Before you can deliver ESPN, the Family Channel, or Comedy Central, you have to come to agreement with big channel owners like Disney, Viacom, and others. Even massive companies like Comcast have to pay the channel owners more each year despite its over 10 million subscribers, so you can imagine how difficult it can be for a small firm to negotiate these contracts. Some channel owners may only negotiate with a provider after it has a few thousand subscribers - but getting a few thousand subscribers without good content is a challenge.

Many small firms (including most munis) join a buyer cooperative called the National Cable Television Cooperative (NCTC) that has many of the contracts available. But even with that substantial help, building a channel lineup is incredibly difficult and the new competitor will almost certainly be paying more for the same channels as a competitor like Comcast or Time Warner Cable. And some munis, like Lafayette, faced steep barriers in just joining the coop.

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Posted January 6, 2014 by christopher

A few weeks ago, a Geekwire interview with outgoing Seattle Mayor Mike McGinn announced that the Gigabit Squared project there was in jeopardy. Gigabit Squared has had difficulty raising all the necessary capital for its project, building Fiber-to-the-Home to several neighborhoods in part by using City owned fiber to reduce the cost of building its trunk lines.

There are a number of important lessons, none of them new, that we should take away from this disappointing news. This is the first of a series of posts on the subject.

But first, some facts. Gigabit Squared is continuing to work on projects in Chicago and Gainsville, Florida. There has been a shake-up at the company among founders and it is not clear what it will do next. Gigabit Squared was not the only vendor responding to Seattle's RFP, just the highest profile one.

Gigabit Squared hoped to raise some $20 million for its Seattle project (for which the website is still live). The original announcement suggested twelve neighborhoods with at least 50,000 households and businesses would be connected. The project is not officially dead, but few have high hopes for it given the change in mayor and many challenges thus far.

The first lesson to draw from this is what we say repeatedly: the broadband market is seriously broken and there is no panacea to fix it. The big cable firms, while beating up on DSL, refuse to compete with each other. They are protected by a moat made up of advantages over potential competitors that includes vast economies of scale allowing them to pay less for advertising, content, and equipment; large existing networks already amortized; vast capacity for predatory pricing by cross-subsidizing from non-competitive areas; and much more.

So if you are an investor with $20 million in cash lying around, why would you ever want to bet against Comcast - especially by investing in an unknown entity that cannot withstand a multi-year price war? You wouldn't and they generally don't. The private sector invests for a return and overbuilding Comcast with fiber almost...

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Posted November 6, 2013 by christopher

Starting with the good news, voters in Colorado overwhelmingly supported municipal network intiatives. Longmont voted 2:1 in favor of bonding to fast track network expansion. We have covered this issue in great depth recently. Read all of our coverage of Longmont here.

The local paper covered the referendum results in this story:

2B's passage means approval for the city to issue $45.3 million in bonds to build out the city's 17-mile fiber optic loop within three years.

Longmont Power & Communications has estimated that the payback time on the bond will be 11 years. If revenues from commercial and residential customers fall short, LPC's electric service revenues will be used to make up the shortfall, LPC staffers have told the Longmont City Council.

South in Centennial, voters supported restoring local authority to build a network by a 3:1 margin. We most recently wrote about this referendum here.

In Seattle, the mayor that campaigned on a citywide fiber network and backed off it but created a partnership with Gigabit Squared to bring gigabit fiber to 12 neighborhoods lost in his bid for reelection to the candidate that that was strongly supported with Comcast donations. However, the election does not appear to have turned on broadband issues:

McGinn’s fate was forecast two years ago, when voters slapped back his efforts to obstruct the Highway 99 tunnel project, opting to move ahead with the long-debated project. McGinn’s anti-tunnel agitating was viewed as a reversal from his 2009 election-eve pledge not to stand in the project’s way.

We continue to be disappointed in the lack of serious discussion in many races about how local governments can make meaningful improvements in Internet access for residents and businesses. We most recently...

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Posted November 5, 2013 by christopher

Seattle will choose its new mayor today in a race that was thrust into an unexpected media spotlight following the Washington Post story on Comcast contributions to the challenger. We covered it early from the perspective of how Comcast wants to send a message to other mayors that may challenge its effective monopoly.

However, it bears noting that mayoral candidate Murray was mostly caught in the crossfire. He had been silent on broadband issues (which should raise some eyebrows given its importance to economic development, education, and quality of life) but after the WaPo story, he proclaimed that he supported the gigabit challenge to Comcast.

Just because Comcast wanted to buy the challenger doesn't necessarily mean that Murray was for sale or would do Comcast's bidding in office. But we are now learning that Comcast has bought 12 meals for Murray as part of their lobbying effort. If nothing else, these stories should be a good reminder of who calls the shots in American politics. As long as we encourage firms to spend big money on elections, the biggest corporations will continue to have far more influence over our government than we do.

Back to Seattle - lest one think this is a clear cut case of pro-competition Mayor McGinn vs. Comcast puppet Murray, a prominent tech blogger in Seattle sets us straight regarding the nuance and complications of such a simple analysis. Brier Dudley starts be reminding us that most people are voting on issues aside from Internet access and continues with:

McGinn simultaneously abandoned years of city planning to build a citywide broadband network and bring fast, affordable service to everyone.

Instead, McGinn opted to part out the city’s fiber-optic network assets, offering pieces here and there to telecom companies. That approach basically...

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Posted November 1, 2013 by christopher

In a reminder of the power embodied in massive corporations like Comcast, Seattle Mayor Mike McGinn is facing a challenger buoyed with sizeable contributions from the nation's largest cable and Internet company.

Why is Comcast so interested in defeating Seattle's mayor? Payback and a warning to others. Lest any other big city mayors think it would be wise to help create competition to Comcast's effective monopoly, know that Comcast will finance your opposition.

We have covered Seattle's various attempts at improving Internet access though we have admittedly not written much on its public-private partnership with Gigabit Squared. Gigabit Squared is a new firm that is starting to work with cities that have fiber assets to deliver services to residents and businesses.

The plan in Seattle is to create a large pilot project in at least 12 neighborhoods offering Internet service at speeds far faster than Comcast but at a lower price. Gigabit Squared is using city owned fiber to build its backbone network and working with the City to expand that network.

However, little has happened in the past 10 months since it was announced except some signs that Gigabit Squared was still trying to raise the necessary capital. We understand that some will start to get services early in 2014.

In the meantime, Comcast has donated heavily to Mayor McGinn's rival Ed Murray at a time when many expected the Mayor to already have a challenging race. From the Washington Post story:

Comcast's donations to political action committees (PACs) suggest Comcast has poured dramatically more resources into defeating McGinn. The Broadband Communications Association of Washington PAC, which received 94 percent of its 2013 contributions from Comcast, donated $5,000 to the group People for Ed Murray less than a month after Gigabit Squared's pricing announcement. That was the PAC's largest single donation. Unsurprisingly, People for Ed Murray has made significant expenditures supporting...

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Posted March 21, 2013 by lgonzalez

Mount Vernon, Washington, started building their own fiber optic network in 1995 and over the past 18 years have continued to add incrementally. While the network started as a way to connect a few municipal facilities, it has since expanded to nearby Burlington and the Port of Skagit. The network now serves government, schools, hospitals and clinics, and a broad range of businesses in the area.

We spoke with community leaders from Mount Vernon for our 38th episode of the Broadband Bits podcast. Mount Vernon owns the network and operates it out of the Information Systems office.

The network required no borrowing or bonding because initial funding came from a state Community and Economic Revitalization Board (CERB) grant. Since then, Mount Vernon has used revenue from the network and creative cost sharing with partners to expand throughout the city. When expanding into Burlington and the Port of Skagit in 2008, city leaders received a county sales tax grant to fund deployment.

The Mount Vernon School District became a partner early in the evolution of the network. According to Kim Kleppe, Information Services Director, K-12 schools do not pay a monthly fee to receive up to 1 gig of capacity for their 10 facilities. He estimates the current costs of a dark fiber connection for one facility at $700 per month. Total savings are astronomical, allowing the schools to dedicate significant dollars toward other expenses.

Mount Vernon city government saves over $100,000 per year and nearby Burlington saves over $52,000. The network has never been in debt and maintains a reserve.

Mount Vernon's network is an open access model on which ISPs serve customers via the city's infrastructure. Subscribers pay a one time fee to the city to be connected. Onging revenue comes from the ISPs, who pay to the city a percentage of what they collect in customer connectivity fees. Currently, eight different providers offer services via the Mount Vernon network, providing ample competition.

Like other communities we see that choose the open access model, Mount Vernon...

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Posted June 30, 2012 by christopher

We have followed Seattle's on-again, off-again consideration of a community broadband network for years and have occasionally noted the successful cable network in nearby Tacoma.

Seattle Met's Matthew Halverson has penned a short, impressive article explaining the trials and tribulations of Tacoma while also exploring why Seattle's Mayor has abandoned his goal of a broadband public option.

Before the massive cable consolidation that has left us with a handful of monopolists, we had a larger number of smaller monopolists that abused their market power to limit competition. One of the worst was TCI, which refused to upgrade its awful services in Tacoma, which pushed Tacoma to build its own network. TCI suddenly decided it did care about Tacoma.

TCI wouldn’t go down easily, of course. For the next year, as the City built out its system, the cable giant took advantage of the utility’s biggest weakness: All of its plans, from the kind of equipment it would buy to its construction schedule, were public information. So when Tacoma Power put in an order with its supplier for, say, coaxial cable, it found that TCI had already bought every foot of it. “But we started in one area of town and luckily we were able to get just enough material,” says Pat Bacon, Click’s technical operations manager. “We just inched our way through it and, before you knew it, we were a presence.” By July 1998, Click had its first cable subscriber, and the first broadband Internet user signed on in December 1999.

A substantial portion of the article is devoted to the dynamics around open access between the utility and independent providers -- an important read for anyone considering the open access approach.

Halverson did his homework on this article and I think he got it mostly right. I think the FiOS-wired suburbs do present a larger threat to Seattle than suggested, but it certainly does not compare to the approaching-existential crisis faced by Tacoma fifteen years ago.

I wish I could disagree with his conclusion that Seattle is unlikely to get a community fiber network but unless the community rises up to demand it, elected officials are unlikely to see any benefit to making such a long term...

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Posted May 10, 2012 by lgonzalez

Christopher Mitchell recently spoke with Marcie Sillman on Seattle public radio KUOW's Weekday. Christopher and Marcie talked on May 8, 2012 about recent developments in local and national broadband, including the April 29th end to Seattle's free Wi-Fi network. Christopher and Marcie also discussed challenges and strategies involved in building a community network.

The interview is just about 13 minutes.

Posted May 8, 2012 by lgonzalez

In 2005, Seattle started offering free Wi-Fi to several neighborhoods, hoping to increase usage among businesses, residents, and passers-by. While the effort was hailed by some, and criticized by others, it was an experiment in community broadband. An experiment that ended on April 29th.

The City still considered the free Wi-Fi a pilot project, even though it had been in operation since 2005. Areas served were the University District and Columbia City neighborhoods, and four downtown parks. There will still be free Wi-Fi in public libraries and in a few hotspots around town as well as in some city facilities, including City Hall and the Seattle Center.

The theory was that municipal WiFi was a workable and cheaper way to get more people online. But Wi-Fi is only cheaper in the short run -- something fiber critics tend to ignore. As Seattle has found, most of the network has to be replaced every 5-7 years.

Technical issues and geography also create unique problems for citywide Wi-Fi. Where to put transmitters, interference from buildings, foilage and water, are all barriers to offering a service that is worthwhile to potential users. David Keyes, Chief Information Technology Officer for the City of Seattle noted these problems where there have been complaints of spotty and unreliable reception. Keyes talked to Brian Heaton of Government Technology:

Seattle would be open to someone taking over the system, but Keyes felt that anyone coming in to do a fresh deployment of Wi-Fi might install it a little differently in regard to wireless access point placement. The actual equipment would also need to be replaced.

Seattle's plan for municipal WiFi has been debated from the beginning. In 2008, Government Technology reporter, Chandler Harris, spoke with Bill Schrier, who was Seattle's Chief Technology Officer at the time. Schrier was also one of the harshest critics of the plan to spread Wi-Fi all over Seattle, saying:

"We found significant problems with the technology," Schrier said. "First of all, if you put up a Wi-Fi point, it will work outdoors, but radio waves don't go through walls. If you put the Wi-...

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Posted February 1, 2012 by christopher

Local governments are often looking for low-risk options for expanding broadband access to residents and local businesses. There are not many. Seattle put some extra conduit in the ground as a part of a different project that was tearing up the streets but Comcast was the only provider interested.

The problem with a haphazard program of putting conduit in the ground is that while it benefits existing providers, it does very little to help new entrants. And conduit is inherently limited -- only a few providers can benefit from it and when used up, there is no space for more providers.

In short, more conduit may slightly improve the status quo but it does little to get us to a future where residents and local businesses have a variety of choices from service providers offering fast, reliable, and affordable access to the Internet.

Smart conduit policy can lay the groundwork for lowering the cost of a community network, which can get us where we want to be. It may take time, but will create benefits far more rapidly than private providers will be building next-generation networks in most of our communities.

John Brown, a friend from Albuquerque, New Mexico, has offered some tips for communities that want to develop smart conduit policies. Brown runs CityLink Telecommunications, an impressive privately owned, open access, FTTH network that connects residents, businesses, schools, muni buildings, etc.

We tend not to support privately owned networks because for all the great work a companiy like CityLink Fiber does, one does not know who will own it in 5, 10, or 20 years. However, we recognize that CityLink Fiber is a far better partner for communities than the vast majority of companies in this space.

The following comments are taken from an email he shared with me and is permitting me to republish. Direct quotes are indented and the rest is paraphrased.

Not all conduit is created equal. A 2 inch pipe will be sufficient for perhaps 2 providers. If conduit does not have inter-duct, it is much harder for multiple providers to share it. Inter-duct creates channels within the conduit that allows a provider to pull its fiber cables through without disturbing other...

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