We have developed a new video to explain why communities consider building their own broadband networks. Please pass it around, embed it in social media, and also remind people that we have a new report with in-depth case studies of community broadband!
Siloam Springs, sporting 15,000 people in the northwestern corner of Arkansas, could be the next community to build its own community fiber network. But first they have to pass a referendum in May in the face of stiff opposition from Cox Cable, which would prefer not to face real competition.
For over 100 years, the city has provided its own electricity via its electrical department. Now, it wants to join the more than 150 other communities that have done so. After last year's changes to Arkansas law, Siloam Springs has the authority to move forward if it so chooses.
Pamela Hill at the City Wire has covered the situation with a series of stories, starting with an explanation of why they are moving forward:
David Cameron, city administrator, said the proposal is not so much about dissatisfaction with current providers as it is about finding new revenue for the city. Cameron said revenue from electric services has been a key source of funding for various projects and necessities for the city. That “enterprise” fund is getting smaller, Cameron said, and an alternative funding source is needed.
“We have done a good job managing accounts, building a reserve,” Cameron said. “We want to keep building on the programs we have. It takes money and funds to do that.”
City officials discussed the issue for the last 18 months and decided to put it to a referendum. Voters will decide the issue May 22.
That is a fairly unique reason. Most communities want to build these networks to encourage economic development and other indirect benefits to the community. Given the challenge of building and operating networks, few set a primary goal of boosting city revenue.
If approved by voters, the city plans to spend $8.3 million to install 100 miles of fiber optic cable directly to homes and businesses. The city should be able to repay the debt in 12 years, if things go according to a feasibility study presented to the city’s board of directors in January. Cameron said projections show the system could begin making a profit...
We are running a guest commentary today. Eric Null is a third-year law student at Cardozo Law School in New York City. He is passionate about corporate and intellectual property law, as well as technology and telecommunications policy. Follow him @ericnull or check out his papers. While researching a paper about municipal broadband networks, I was struck by the tremendous benefits that municipal networks can provide. It can be the first high-speed Internet link for an area without broadband, or it can provide some much-needed competition in areas that currently have access to broadband, but for some reason that existing access is unsatisfactory (e.g. price, service). Municipalities, in theory, can run the network for the benefit of the public rather than with a vicious profit maximization motive. Indeed, municipal networks bring many benefits. But first, a little history. In the United States, cable providers have set up regional monopolies for themselves, and “competitors” such as DSL and satellite are characterized by slower connection speeds and it is arguable that they are actual substitutes to cable access. Certainly within the cable industry, any “competitive” cable company attempting to compete with incumbents is met with high costs of building new infrastructure and lack of customer base. Municipalities can pick up where smaller, private entities cannot succeed. Municipalities have had a long history of investing in critical infrastructure, and they have the mentality for long-term planning that private companies simply cannot enjoy. A large company like Verizon likely has to justify any expansion of its network to its investors and ensure them that the venture will return a profit relatively quickly. Not so with municipalities; a city network allows its citizens to benefit indirectly (and directly) over the long-term. Thus, city governments can be a formidable competitor in the telecom and cable industries. Some states, regrettably, have banned or restricted the practice. In Nixon v. Missouri Municipal League, the Supreme Court interpreted so-called vague language in the Telecom Act of 1996...Read more
AT&T lobbyists in Georgia and South Carolina are arguing that local governments should not be allowed to build the networks that communities need, suggesting that the private sector is primed to make the necessary connections. But AT&T's CEO had a different message for investors a few weeks ago, in an earnings call on January 26:
The other is rural access lines; we have been apprehensive on moving, doing anything on rural access lines because the issue here is, do you have a broadband product for rural America?
We’ve all been trying to find a broadband solution that was economically viable to get out to rural America, and we’re not finding one to be quite candid. The best opportunity we have is LTE.
Whoa! LTE is what you more commonly hear called 4G in mobile phone commercials. The best they can do is eventually build a wireless network that allows a user to transfer just 2GB/month. That is fine for hand-held devices but it does nothing to encourage economic development or allow residents to take advantage of remote education opportunities.
But even the CEO admits they are not bullish on LTE as the solution:
[W]e’re looking at rural America and asking, what’s the broadband solution? We don’t have one right now.
Some may be wondering about "U-Verse" -- AT&T's super DSL that competes with cable in the wealthy neighborhoods of bigger cities. U-Verse cannot match the capacity or quality of modern cable networks but is better than older DSL technologies. But U-Verse is not coming to a rural community near you.
For those who missed the fanfare last year, AT&T's U-Verse build is done. AT&T's lobbyists have probably forgotten to tell Georgia and South Carolina Legislators that the over 20 million AT&T customers without access to U-Verse are not going to get it. But CEO Stephenson made sure investors weren't...Read more
A group of rural residents living east of Madison, Wisconsin, gathered near Portage of Columbia County to discuss their lack of affordable high speed access to the Internet. These are people for whom slow, overpriced DSL would be an improvement.
Lack of access to the Internet is a drain on rural economies -- their real estate market suffer and they are unable to telecommute, when they would benefit more from it than most who do have the option. They lack access to long-distance education opportunities in a time when the cost of gas makes driving to school prohibitively expensive.
Andy Lewis, who has been working with the Building Community Capacity through Broadband Project with U-W Extension, was on hand to discuss some of the lessons learned through their work, which is largely funded by a broadband stimulus award.
The incumbent providers encouraged residents without access to aggregate their demand and create petitions to demonstrate the available demand. Of course they did. And if CenturyLink decides it can get a sufficient return on its slow and unreliable DSL, they will build it out to some of those unserved areas. This is a "damned if you do, damned if you don't" scenario for rural residents. DSL was starting to be obsolete years ago.
The better solution is finding nearby cooperatives and munis that will extend next-generation networks that can provide fast, affordable, and reliable access to the Internet. Getting a DSL to a town will do very little to attract residents and nothing to attract businesses. It is a 20th century technology in a rapidly evolving 21st century world.
The Beaver Dam Daily Citizen covered the meeting, which eventually turned away from how to beg for broadband to how they can build it themselves:
But several attendees asked why the government can't play a role in making high-speed service available everywhere, in the same way that the government helped bring about rural electrification and telephone service.
This is a very good question. They may decide not to follow that path, but given the importance of access to the Internet, they should look at options for building a network that puts community...Read more
We have long been arguing that the telephone and cable companies are not sufficiently investing in the connections needed by communities.
Quarter after quarter, companies offering DSL see decreases in their lines as subscribers jump to cable or fiber-optic alternatives (where available, which is not many places). Recall that AT&T's CEO himself believes DSL to be obsolete.
As this trend continues, most communities will find that a single cable company has a monopoly on high speed broadband access and those willing to settle for slower, less reliable alternatives will have a choice between DSL and wireless options. Susan Crawford has written about this, terming it the Looming Cable Monopoly.
The main reason is that cable is cheaper to upgrade to higher capacity connections than the telephone lines. Unfortunately, due to the reality of natural monopoly, the big cable companies will almost certainly continue to dominate in their communities. It is just too hard and risky for other businesses to challenge their market power.
This is why smart communities are evaluating all their options and determining if a long term public investment in fiber-optic infrastructure would generate enough benefits to justify the high upfront cost.
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...Read more
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...Read more
Tullahoma's LightTUBe FTTH network, owned and operated by the Tullahoma Utilities Board, has attracted J2 Software Solutions to locate its headquarters in town [PDF]. Its CEO, Jerry Wright offers some background:
Wright said J2, which specializes in providing high-tech software to law enforcement agencies to handle dispatching, records management and other related functions, needed to have the highest speed, most dependable Internet service available.
He said TUB, through its LightTUBe broadband communications service, provides exactly what his company needs to thrive and expand.
"What LightTUBe has is top of the line," Wright said, adding that normal cable TV service and higher speed digital subscriber line, commonly referred to as DSL, were not adequate to meet the company’s volume and demand.
Sounds like confirmation of the story we we just wrote about AT&T's CEO admitting DSL is obsolete.
Congratulations to Tullahoma for making smart investments in its own future.
In a Q&A following a speech at the National Association of Regulatory Utility Commissioners, AT&T CEO Randal Stephenson candidly called DSL obsolete. This echoes not only our view, but that of hundreds of communities who have built their own networks upon realizing they cannot be competitive in the modern world with DSL.
Interestingly, AT&T still has millions of customers that use its DSL product. And it has announced its super-DSL offering called U-Verse is finished -- no doubt surprising many state-house policymakers that AT&T had convinced they would invest in communities.
The context of his comment was that DSL is no longer competitive with cable in broadband capacity (and often reliability) -- something we documented in our video comparing different types of networks. We would argue that U-Verse itself is not competitive with cable due to its greatly constrained upstream speeds -- even worse than cable networks typically experience.
So, to recap -- we have yet another admission from the private sector that it is delivering obsolete broadband services to our communities. How can there be any surprise that so many more communities are considering building their own networks to create economic develop, increase quality of life, and generally be competitive in the digital economy.
If AT&T can barely keep up with the investment necessary for our communities, how can far less profitable companies like CenturyLink and Frontier? They can't. But that doesn't stop them from advertising the hell out of their obsolete networks. Smart communities will choose self-determination rather than betting on last-generation networks run by distant, unaccountable corporations.