Tag: "incumbent"

Posted April 16, 2010 by christopher

Stop the Cap! sounded the alarm that North Carolina is once again considering a bill to prevent competition by effectively banning communities from building their own networks.

The Communities United for Broadband Facebook page notes:

The cable industry will be pushing a bill to stop communities from investing in fiber optic infrastructure on April 21st at 9:30am in Raleigh before the Revenue Laws Committee in room 544 of the Legislative Office Building found at 46 W. Lane St, Raleigh, NC.

This bill is being pushed by the private cable and telephone companies that are threatened by the publicly owned FTTH networks already in Wilson and Salisbury. North Carolina has a number of communities that have been inspired by the Gigabit promise of Google and are considering how they can build their own network if Google does not choose them. This bill will prevent communities from building the infrastructure they need to succeed in the future.

I should note that Craig Settles is working with the Communities United for Broadband folks. They have a great slogan: Picking up Where Google Leaves Off.

Posted April 15, 2010 by christopher

From an article in the local paper about Lancaster, Pennsylvania's Google Gigabit Application:

Brogan said that if Lancaster is selected, it would not run afoul of the state Telecommunications Act. That law prohibits cities from establishing municipal broadband networks except if existing providers indicate they have no immediate plans to offer similar services.

She said the city already has a letter from Verizon clearing the way for the Google application.

Oh good, glad the city secured permission from one private company to ask a different private company to build infrastructure. In the words of Yakov Smirnoff, "What a Country!"

Posted April 5, 2010 by christopher

Recent letters in the Chattanoogan reflect frustration with the cable incumbent, Comcast, and the ease of switching to the publicly owned EPB Fiber network. This is one of them:

My Comcast exit was very easy. Step one: Make appointment to have EPB Fiber service installed. Step two: Put all Comcast receivers and remotes in a box and hand it through the "teller" window at the Comcast office. Step 3: Ask for a receipt from the nice lady to whom I handed the box. Step 4: Receive my Comcast credit balance check in the mail and open it while watching TV on the EPBFI system. I never even had to speak to a Comcast phone rep in India.

A previous round of letters discussed several of the ways the publicly owned network is superior to Comcast, though one customer complained that EPB Fiber was too expensive, compared to Comcast's introductory and temporary rates (incumbents like Comcast typically negotiate rates in response to competition without advertising the reduced rate - so customers who are willing to haggle over the phone may find cheaper prices from a private company willing to lose money to deny customers to competition).

One reader noted how fast the local, publicly owned network installed the network.

I left shortly after that call [ordering service] and returned a couple of hours later from grocery shopping. EPB contractors had already been to my home and installed the boxes on the side of the house. Yes, super fast service.

The day the installers came to complete the inside installation, they were on time, courteous and knew just what needed to be done to complete the install. One of the men even told me of a problem with my A/C heating unit duct work underneath my home which needed to be looked about soon. The men cleaned all the areas they worked in, made sure all my services worked correctly and asked if I had any questions they could answer before they left. Both men did a fantastic job and worked quickly to complete the work.

Posted March 31, 2010 by christopher

Light Reading took an in-depth look at FairPoint's anti-competition, anti-public ownership lobbying in Maine, where it is fighting a stimulus award to a consortium that includes a public entity. We have previously covered goings-on in Maine where FairPoint is involved due to their terrible track record of offering services while pushing for rules that would prevent communities from building their own networks.

For those who are not familiar, FairPoint had bought the lines from Verizon as part of a tax-dodge called the "Reverse Morris Trust" (one loophole that might be closed before Verizon can abuse it again). FairPoint promptly went bankrupt, but not before screwing up service for thousands upon thousands of residents and businesses in New England (from months of screwed-up billing to weeks without telecom services). Now FairPoint wants to make sure many Maine residents have no choice in providers for the foreseeable future.

Carol Wilson's look at this situation is fairly comprehensive.

... Maine Fiber Co., won a $25.4 million grant to build what is called the Three-Ring Binder, an middle-mile fiber optic network that will include three fiber rings in Western, Northern, and Downeast Maine. Maine Fiber’s intent is to lease dark fiber as an open access network, and not to sell commercial services.

More details about the Three Ring Binder are available here and here.

The Maine Fiber Company is a private sector entity that has partnered with the University of Maine System. Though the company will run the network, some fibers will be reserved for the schools - this is a common private-public partnership that is mutually beneficial. This network will be open access - meaning that all can use it on equal terms (as opposed to being monopolized solely by the owner, as FairPoint does with its network). But FairPoint sure doesn't want to deal with competition in the many areas that it currently monopolizes with poor service at high prices.

It [Three Ring Binder Network] is now facing a challenge from FairPoint Communications Inc. , which bought...

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Posted March 29, 2010 by christopher

Ran across this interesting story out of Silverton, Colorado - where Qwest has refused to provide a reliable telecommunications connection to the least populous county in Colorado. Recall that Qwest's refusal to offer redundancy in Minnesota's most rural County led to a total communications blackout for twelve hours, shutting down public safety and businesses alike.

Silverton is the only town in rural San Juan County. The City is splitting the costs ($121K) of a new publicly owned fiber-optic loop with the County and apparently the State is offering a grant for the balance. As we emphasize time and time again, cities that move from leasing multiple lines from the incumbent to owning their network radically increase available speeds while cutting costs. Silverton estimates it will save 50% or more in its telecom expenditures. These savings will pile up over time because owning the network typically leads to decreasing costs over time whereas leasing lines offers much less control over future telecom budgets.

But perhaps the more interesting aspect of this story is that San Juan County is the only County in the state not connected with fiber-optic lines. Qwest has:

a 10-year, $37 million contract to provide high-speed connectivity to every county seat in Colorado, forming a statewide network known as the Multi-use Network, or MNT.

To save money, Qwest is using a microwave (wireless) connection for San Juan County, which is far less reliable than would be a fiber-optic connection. For such a rural area, microwave might be a good secondary connection, offering a backup in the case of a fiber cut or natural disaster. However, making that the primary connection is what happens when Qwest is calling the shots.

Qwest is not looking out for the interests of first responders, residents, or businesses in Silverton, it is looking for "a compelling business case" in their own words. And this is exactly why Qwest should not be in charge of essential infrastructure.

Posted March 20, 2010 by christopher

Jesse Harris continues his monthly podcast show with an interview of Ken Sutton from Brigham.Net - a service provider from Brigham City that recently started offering services on the UTOPIA network.

Brigham.Net has developed a very loyal customer base -- an impressive feat as it was dependent on leasing loops from Qwest, its biggest competitor. In that part of Utah, Qwest still has to share its lines with third parties but Qwest still goes out of its way to make life difficult for those third parties. Qwest poached customers from Brigham.Net - a common practice if one talks to any ISP that has leased lines from Qwest to resell.

By getting on the open access network, Brigham.Net has expanded its customer base - it is on track to double the customer base in Brigham City when the UTOPIA network is fully available to residents.

The discussion is interesting and shows why unbundling requirements are inferior to a publicly owned network operating on an open access basis.

Posted March 17, 2010 by christopher

The Star Tribune ran my opinion piece on Monday, March 15

The vast majority of Minnesotans, like the rest of the country, are served by only two broadband suppliers: the cable or telephone company. These companies generally want to maintain their monopolies because they can postpone upgrades while keeping prices and profits high. Just about everyone else just wants a better choice among providers.

The result of this structure is that we pay much higher prices for slower internet connections than our peers in Europe and Asia.

Here in Minnesota, Monticello has broken the mold. It has transitioned from relying on an overpriced and slow DSL network to now offering the best broadband in the entire state. Monticello residents can choose between a symmetrical 20 Mbps connection (extremely fast) from the City for $35/month or the incumbent telephone company’s new 50 Mbps downstream and 20 Mbps upstream option for $50/month. They have better packages than Comcast’s best residential offers in the Twin Cities – and available at half the price!

Entering the local telecommunications market is quite difficult. Building a network costs hundreds of millions for large cities and tens of millions for communities from 10,000 to 50,000. Once the network is built, the costs of adding new customers actually decreases as the number of subscribers increases. This cost structure gives incumbents tremendous advantages because they can drop their prices precipitously if a new entity – public or private – tries to build a competing network. To date, incumbents have largely succeeded in fending off competition.

Given the sorry state of broadband in many communities, especially rural ones, it should be no surprise that many cities and counties have started to build their own networks. And happily, they’ve done so with great success. Creating competition forces incumbents to invest and cut prices, generating significant community savings as well as other advantages from a network that operates in the public interest.

Unfortunately, there are additional barriers for communities attempting to build their own state-of-the-art broadband networks. As a result of lobbying by incumbents, some eighteen states have created obstacles to publicly owned networks.

The need for any state barrier to community networks is dubious. Most states see no need for...

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Posted March 14, 2010 by christopher

A recent article from GovPro.com, "Cities make end run around data network obstructions," has a good discussion of why referendums are not a good way of ascertaining community support for a community network:

A 2005 Colorado law bans municipalities from providing any type of advanced telecommunications services unless more than 50 percent of the voters favor the plan. Longmont's ballot question asked voters to allow the city to provide services either directly or in partnership with a private company, but 57 percent of voters said no.

"Comcast decided it didn't want Longmont to go there," says Tom Roiniotis, director of Longmont Power & Communications, the city's community-owned electric utility. Comcast spent about $200,000, the largest contribution to any campaign in Longmont's history, to defeat the measure, Roiniotis says. Meanwhile, once the issue became a ballot initiative, Longmont was not allowed to spend any money to campaign for the ballot initiative because that would violate campaign financing laws. "We were walking with one arm and one leg tied behind our back when it came to this campaign," Roiniotis says.

Posted March 12, 2010 by christopher
Though I did not spend a lot of time following stimulus proposals, two excellent proposals did catch my eye from Idaho and I hoped that at least one of them would be funded. Alas, neither was funded by NTIA or RUS. These are exactly the networks we need throughout the country, and Idaho is exactly the state that could benefit greatly from federal assistance. I hope these projects have better luck in the second round or in securing future funding from RUS outside the stimulus project. (This is not to suggest I disapprove of the Coeur d'Alene Reservation Fiber-to-the-Home (FTTH) Project that received funding - I am not as familiar with it and therefore have no comment on it.) The town of Ammon, some 13,000 people near Idaho Falls in eastern Idaho, developed a proposal for an a type of next-generation open access network in that it would offer greater flexibility to subscribers and service providers than many current open access networks. The other project, to serve the Northern Panhandle area, was designed with Ernie Bray, who previously consulted on the Powellink network in Wyoming. The Boise Weekly briefly discussed these projects a few weeks ago, noting their open access approach that would serve residents, businesses, and key institutional anchors with fiber-optics:
"Every entity we need to work with is already a stakeholder; we're ready to go," he said. "And we will use revenues for expansion and build out. We're trying to expand the concept of a service provider and services beyond just the triple play, voice-video-data," he said. "Telemedicine is a service, hospitals are service providers. We want to take fiber to every home and every business, then connect them to libraries, schools and job services so they can take advantage of programs to help lift them up."
Local jobs are at stake and incumbent providers are doing little to help:
Quest [Aircraft], who builds the Kodiak airplane, they've gotta exchange large engineering files in real time; 250 jobs are at stake.
Verizon is busy trying to offload all of its rural territories on Frontier (a company famous for slow and poor service) so it isn't about to upgrade facilities in Idaho. More recently, Boise Weekly... Read more
Posted March 4, 2010 by christopher

Minnesota is one of the eighteen states that have enacted specific barriers to prevent the public sector from building networks (protecting incumbents from any competition). It presently has the uniquely high - 65% - referendum requirement on communities that want to build a network that will offer telephone services (which thereby includes all fiber-to-the-home triple play networks).

However, up in Cook County, they could not meet that threshold. They had a referendum in which 56% voted yes - a majority but not satisfactorily large for a 1915 MN law. State Representative Dill and Senator Bakk realized this was crazy - state law set too high a bar for the County they represented. Cook would be unable to build the network they need - remember that the whole County was isolated following a single fiber cut because Qwest does not invest in communities where profits are scant (let's not blame Qwest though - private companies are not supposed to be charities and they should not be expected to build the essential infrastructure communities need).

Rep Dill and Sen Bakk introduced a bill to reduce the 65% to 50% referendum but the private providers must have thrown some sort of tantrum. Before the bill could even be heard, incumbent providers had reached some sort of a deal with Rep Dill and Sen Bakk, agreeing that they would not oppose the bill if it only applied to Cook County. Cook would be able to build its network, but all other local governments, many very rural and in similar but not equal severity, would be stuck with the 65% referendum requirement if they wanted to build a similar network. In the House, this "compromise" has flown through multiple committees with little debate.

In the Senate, some fought back, wondering if perhaps massive incumbent providers shouldn't be the ones to determine if communities can build modern networks -- especially when the providers won't. So the bill was introduced in the Senate. It was quickly amended to the incumbent demanded-text, but was then amended back again to a 50% majority for all MN (better than the 65% in current law). This was all in the Senate Committee dealing with Telecom. Confused yet?

It was next forwarded to the Committee dealing with Local Government, where the...

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