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PUC Gives Lake Communications Authority to Offer Broadband on Minnesota North Shore

When last we looked in on the Lake County FTTH project connecting rural areas north of Lake Superior, the County had just ditched its original management team and Mediacom started trying to derail the project.

The County went on to hire "Lake Communications," a two man firm created for this project, while Mediacom presumably returned to quietly scheming against the introduction of any competition on their turf. Lake Communications has received authority by the Minnesota Public Utilities Commission to provide broadband in their target territory.

Kevin O’Grady, a staffer for the Public Utilities Commission, called Thursday’s 5-0 vote “uneventful.” He said that aside from a protest from the Minnesota Cable Communications Association that was withdrawn just before the vote, the application was “nothing out of the ordinary.”

The cable association, which faces competition from the fiber project, had complained that the county, without a public vote, couldn’t be the legal authority to provide telecommunications services under Minnesota law. The commission, responding to the complaint, said the authority would be granted to Lake Communications, which it deemed had a proper relationship with the county in providing the service.

The county plans to build the network and lease the lines to Lake Communications for revenue. In its original response to the cable association’s complaint, the state commission said Lake Communications’ application “complies with the requirements typically applied by the commission to applications” across the state. It also stated that Lake Communications’ financial statements were “sufficient and consistent with the financial information filed by other applicants for authority.”

Remember that Minnesota law requires a supermajority vote of 65% before cities and counties provide telephone service. In this case, Lake Communications will be offering the services on infrastructure owned by the County. If there is any sliver of a doubt about the legality of this arrangement, we can expect Mediacom or the Minnesota Cable Communications Association to file suit.

But now is probably not a good time for them to sue. Most of the time, the point of lawsuits against community networks is not about winning the suit, but rather delaying and disrupting the project. So one would expect a lawsuit to occur much closer to the ground-breaking. Why risk suing now, when the lawsuit could be resolved over the winter, when little work is being done? Better to wait and hope the suit takes much of the construction season away from the potential competitors.

We hope this is too cynical a reaction, but watching some of these lawsuits play out leads one to such suspicions.

This is yet another reason the Minnesota Legislature should make it very clear that local governments have full authority to bond for, finance, build, operate, and own these networks -- preferably with no more barriers than are common for other significant public expenditures.

Without this project, much of Lake County and the nearby areas also served by this project will simply not have fast, affordable, or reliable access to the Internet. Let's hope the anti-competitive desires of a few companies in portions of the county do not derail it for everyone.

Encouraging Community Networks in Chino Hills, California

Chino Hills, California, knows what is like to need broadband - back in 2004 they had to poke and prod Verizon and Adelphia into offering broadband services in their town. Some of the folks from that effort are interested in exploring the idea of a community-owned broadband network.

Time Warner is an $18 Billion dollar company with $1.3 Billion in profits in 2010. Verizon did $106 Billion with $2.5 Billion dollars in profits in 2010. They're not worried about Chino Hills. In fact both of these companies are actively lobbying states around the country to prevent local municipalities from entering the broadband market. I'd like to see our city enter this business and give these national companies a run for their money.

Our video (included below) comparing community fiber networks to services from big incumbent providers has some there thinking that they should consider building their own network to prepare for the near future when much higher capacity networks will be needed to take advantage of all the applications moving to the cloud.

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Christopher Mitchell on PK's In the Know Podcast

Public Knowledge recently had me as a guest on their "In the Know" weekly podcast. Our interview is the last half of the show. The videos we reference in the discussion are embedded below.

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Need Cloud Services like Online Backup? Steer Clear of Comcast

The net is buzzing about Comcast's data caps after a Seattle resident ran afoul of them. I found it particularly interesting given Seattle's recent decision to use its assets to further Comcast's monopoly following a poorly considered RFP.

This story highlights many of the frustrations and injustices that come with companies as massive as Comcast effectively monopolizing an essential utility, with practically no oversight locally or federally.

When Comcast enacted is 250GB monthly transfer cap years ago, many thought it was sufficiently high that few would run afoul of it. But the smart folks noted that if it did not increase as natural usage increases, it would hurt legitimate users (as opposed to those who run servers constantly trafficking in file sharing that violates copyright).

I made very clear to the gentleman I spoke with that I thought Comcast’s data cap policy was arbitrary, unfair, and extremely irritating… and that if I had any decent competitive options in the neighborhood I’d dump Comcast in a heartbeat. Since I don’t, I listened to him read his canned warning that if I exceeded their cap again I’d be cut off again.

Bear in mind that when you fill up the fuel tank in your car, you are at a gas station that is regularly inspected by the state to ensure it is correctly measuring the volume of gas dispensed. Comcast is not similarly regulated and we have to take Comcast's word on how much traffic we use. Most of the time I have visited Comcast's meter to see what my household usage is, I have been unable to even access it.

But back to the story, our Seattle friend later found that he had unintentionally violated the cap again, despite taking precautions not to:

The Customer Security agent was polite, and after the standard identification questions notified me I was cut off for a year due to exceeding Comcast’s Acceptable Use Policy limits on their bandwidth cap. I asked for details on what had been using bandwidth, and again, Comcast would not share. In a sudden brainstorm, I then asked whether the 250 GB bandwidth cap applied to just downloads (which I had assumed, as the majority of most bandwidth used in households is downstream bandwidth), or download and upload bandwidth. Surprise, surprise! Comcast measures both upstream and downstream bandwidth – and it suddenly clicked for me.

I’m a photographer and audiophile. I shoot all of my pictures in RAW format, and I store the many hundreds and hundreds of CDs I’ve purchased over the last 20 years or so in a variety of lossless and lossy music formats. …

This stuff is valuable to me, and I recently purchased a three-year subscription to Carbonite so I could back all of this content up to the cloud. I also recently saw Amazon’s announcement of being able to upload unlimited M4A/AAC tracks to their Cloud Drive service, and decided to upload my library there so I could access it when on the road. And it turns out uploading all of this content to the cloud triggered Comcast’s bandwidth cap and caused me to be cut off from the internet – again.

This is what you can expect from Comcast, which is only growing in power and influence. They have a flawed meter that is poorly understand by their customers (is it measuring up or down or both?) and will provide you will no help in the event they believe you have exceeded your allotment.

This is exactly why communities need to consider building their own networks that are directly accountable to the community.

Photo used under Creative Commons license, courtesy of Titanas on flickr.

Community Networks Provide Cable/Broadband Competition That is Otherwise Unlikely

You can also read this story over at the Huffington Post.

How can it be that the big companies who deliver some of the most important services in our modern lives (access to the Internet, television) rank at the top of the most hated? Probably because when they screw up or increase prices year after year, we have no choice but sticking with them. Most of us have no better options.

But why do we have so few choices? Government-sanctioned monopolies have been outlawed since the 1996 Telecommunications Act. Unfortunately, the natural tendency of the telecommunications industry is toward consolidation and monopoly (or duopoly). In the face of this reality, the federal government has done little to protect citizens and small businesses from telecom market failings.

But local governments have stepped up and built incredible next-generation networks that are accountable to the community. These communities have faster speeds (at lower prices) than the vast majority of us.

Most of these communities would absolutely prefer for the private sector to build the necessary networks and offer real competition, but the economics of telecom makes that as likely as donuts becoming part of a healthy breakfast. In most cases, the incumbent cable and telephone companies are too entrenched for any other company to overbuild them. But communities do not have the same pressures to make a short-term profit. They can take many years to break even on an investment that creates many indirect benefits along the way.

One might expect successful companies like AT&T and Time Warner Cable to step up to the challenge posed by community networks, and they have. Not by simply investing more and competing for customers, but by using their comparative advantage – lobbying state legislatures to outlaw the competition. As we noted in our commentary and video last week, massive cable and telephone companies have tried to remove local authority to build networks.

These companies frequently claim they are at an unfair disadvantage when they have to compete against a broadband network owned by the local government. This claim resonates strongly with some politicians, particularly those who happen to receive a lot of campaign contributions from big telco and cable companies -- as recently demonstrated in Wisconsin. They say they just want a "level playing field."

We decided to take a deeper look. We compared Time Warner Cable to Salisbury, North Carolina -- which built one of the newest community fiber networks – to see who is at a disadvantage.

TWC v Salisbury Fibrant InfoGraphic

Big companies like Time Warner Cable have some big advantages over any community that decides to build a network. Of course, communities do not build their own networks on a lark, they do it because they need fast, affordable, and reliable networks for economic development and maintaining a high quality of life.
But a better comparison goes beyond simply the scale of the competitors in order to complete a more meaningful comparison. For that, we created our “Level Playing Field” video, attached below.

There should be no doubt that massive incumbent cable and phone companies have a monopoly on the “unfair” advantages in telecommunications. Fortunately, community networks have a host of local advantages and often superior technology with which to invest in the networks they need. The question is whether Congress and the states will protect the right of communities to choose for themselves if a local community network is necessary.

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Response to Seattle RFP: More of the Same

We have an answer to the question of what a city gets when it commits the bare minimum to improving broadband access: more of the same. We were skeptical of Seattle's approach of using city-owned conduit to spur serious improvements to broadband and, it turns out, correct.

Only one company bid on the project, Comcast, a provider in much of Seattle already -- and a much maligned one at that. So Pioneer Square will have better access to the Internet, but from the dominant provider of high speed access in the City.

Seattle just helped Comcast consolidate its monopoly just a bit further. This is a small step forward for Pioneer Square, and a larger step backward for the City as a whole. With FiOS available in the suburbs, offering much faster and more reliable connections for the same prices, Seattle has done very little to stem the flow of techies to the burbs.

The RFP set certain requirements for use of the City's conduit, as noted in the Seattle Times article but one has to wonder if Comcast might be able to negotiate that down - few are better at exercising monopoly power than the Nation's largest cable and Internet provider.

Comcast is slated to pay $78,000 in one-time fees to cover part of the cable's installation, plus $4,057 in annual leasing fees, according to city documents.

The City elected a Mayor who promised to improve broadband access, but it seems the City Council is standing in the way of actually doing anything that would bring residents and businesses a meaningful choice in providers.

Photo, used under creative commons license, courtesy of Jeff Hathaway

Greenville: The Texas Muni Cable Network

If you the take a look at our community broadband map, you'll see that Texas has only one citywide wired network owned by the public: Greenville. The story behind it is the same story we hear from just about every other community - but they actually spelled it out on their history page.

In 1999, Greenville, Texas' economic development leaders were unable to attract certain businesses and on the verge of losing existing companies due to a lack of high speed Internet.

In response, Mayor Sue Ann Harting asked SBC for a commitment to deploy DSL. That request was denied. The city's cable franchise, Time Warner, also declined to commit to cable modem Internet deployment.

Greenville found itself in a situation similar to one that many towns had faced years ago when railroads changed transportation. If the railroad was not routed through a town, that town just might die. What would happen to Greenville if the information superhighway did not come through the city?

Incumbent cable and telephone companies, their lobbyists, and associated "think tanks" like to claim that communities are somehow "duped" into building publicly owned networks. The truth is that just about every community wants to avoid the hassle of building a network but incumbents refuse to invest sufficiently to keep the community competitive for economic development and a high quality of life.

They build networks when backed into a corner, not because they want to. Fortunately, all that hassle almost always pays off with far more benefits than problems over the long term as communities transition from depending on some distant corporation to solving their own problems locally.

In fact, the results are often like that of Greenville:

Greenville citizens were not willing to take that chance. They took destiny into their own hands by amending the city charter to allow their revenue-only supported, municipally-owned electric system to build a hybrid fiber coaxial system to make high speed Internet available to everyone. Digital cable TV was offered as an option on that same system.

Once the citizens had committed to this venture, the city's incumbent telephone and cable franchises found ways of deploying that high speed Internet that they had only recently declared not feasible in Greenville.

In 2001, citizens began connecting to the city's state-of-the-art system that accessed all 10,000 of the homes and business in Greenville. Public acceptance has been very good, with more than 4,500 of those homes and businesses (as of June 2005) now choosing the new municipal services after less than four years in business. Financially, this non-tax supported venture was seeing black ink earlier than expected.

Public acceptance readily came from slightly lower cost to the consumer plus faster Internet speeds and more cable TV channels than the incumbents offered. (The existing cable company wasn't even offering ESPN 2 in 2000). Consumers also welcomed the chance to have these multiple services placed on one bill with "one-stop" local customer service to handle all of the municipal services - one inclusive bill for water, sewer, garbage, electric and cable TV and Internet as options.

After the community built its network, the incumbent providers finally upgraded their services and undoubtedly lowered their prices. The local Chamber of Commerce has this to say about the public investments:

Greenville is fortunate to have its own non-profit, locally operated municipal electric, digital cable television, high speed Internet, water, and wastewater utility systems. 

Unfortunately, Texas is one of the four states that have made it all but impossible for other communities to copy Greenville's success. And as long as AT&T can dump millions into the Legislature, that law will be hard to change.

Munis Tell Carriers: Forget You Guys

MHT, Mass High Tech -- the Voice of New England Innovation -- recently turned a spotlight on the difficulty of creating Ubiquitous high-speed broadband. Always refreshing to see others understanding the real impediments to expanding fast, affordable, and reliable access to the Internet in this country:

For Andrew Rollins, chief software architect for Cambridge mobile analytics software as a service company Localytics Inc., the answer is to go DIY — at least for municipalities.
“I think the most interesting thing that is happening today is that you are looking at municipalities that are saying (to carriers), ‘Forget you guys. We are going to do it ourselves,’” Rollins said.

That is happening because there is no real business incentive for broadband carriers like Verizon Communications Inc. or Comcast Corp. to make the investment in infrastructure required to reach everyone in the U.S. Add to that the deals they have struck to function as monopolies in many locations, and it adds up to companies that really want to hold on to the status quo, Rollins said. “Somehow you have to incentivize these guys to build out the infrastructure and I don’t think they are going to do it on their own. They’re already gouging the heck out of customers today so why bother making that infrastructure if you are already getting that money out of people.” 

They go to discuss the backwards approach from North Carolina:

“Down in North Carolina they have been actually going out of their way saying the community fiber-to-the-home and broadband networks are bad and can’t happen,” she said. “That’s not going to get us there. If you say to the communities that you can’t do it yourself, that’s not an environment in which we can achieve success, not just in 5 years but in 10 or 20 years.”

Well worth the read.

WiscNet Under Continued Attack, Contact Elected Officials

As we feared, the compromise may have been compromised by the uncompromising power of AT&T lobbyists. Once again, we learn that they struck at the last hour and may have put local schools and libraries on the chopping block.

If WiscNet goes and stimulus funds are returned, local institutions will have to double and triple their telecom budgets just to continue receive adequate service. This is intolerable. Until we hear otherwise, we encourage people to continue contacting their elected officials [pdf] in Wisconsin to express their opinion on the matter.

Some more details here and here.

Update: The Assembly will now be meeting at 1:00 rather than this morning. Rumors abound that they are still discussing how to "compromise" on AT&T's attack on the schools and libraries.

Unfortunately, this afternoon, I'll be leaving for a short camping trip (AT&T is not going to ruin my trip) and I have some canned posts queued up, so I won't be able to cover what happens in Wisconsin immediately. For news on the stimulus grant impact, follow WI_Broadband and for news about WiscNet, follow ijohnpederson and his live blog.

2nd Update: To understand how AT&T has so much power in Wisconsin, check out who "donates" the most money.

Positive Update from Wisconsin on WiscNet, Stimulus Awards

The word from Wisconsin is mostly good. A deal has been struck that will spare WiscNet, though it will be studied for two years and then could be killed. But a fair, open study will allow WiscNet to clearly demonstrate its value -- WiscNet thrives in the light while AT&T thrives at secretive, last minute measures to gut its competitors.

Additionally, the stimulus grants appear to be safe. The Legislature apparently will not require them to be returned long after the recipients had begun implementing them. But again, there is some bad news in that UW Extension will be restricted from receiving federal grants in the future to build the networks otherwise unavailable to schools and libraries. So that is disappointing. Returning those funds would have cost a few communities $27.7 million over just 5 years.

However, nothing is settled until the Legislature fully votes on it (today and Thursday) and the Governor signs the bill. AT&T lobbyists don't get paid to create fair compromises and surely aren't finished scheming. So make sure you have made your thoughts on this matter known to your elected officials. The Rootstrikes make it easy. Don't forget to tell the Governor too -- the line-item veto is a powerful tool.

Some more details have emerged regarding the damage to local budgets that would occur if the Leg requires the stimulus awards to be returned, in the Superior schools, for instance:

"We would pay about five times more for the internet access than we already pay through Wiscnet," said Nordgren [Associate Vice Chancellor of UW Superior].

The Superior School District said they would also lose money, because they have already invested $300,000 in anticipation of the project.

"We utilized the funding from this broadband grant in order to purchase and update our website that was archaic," said Janna Stevens, Superintendent at the Superior School District.

logo-league-wi-munis.png

The Wisconsin League of Municipalities vociferously opposes language harming WiscNet [pdf]:

Finally, we strongly oppose JFC’s decisions to dismantle WisNet and to reject $37 million in federal dollars for promoting broadband service in rural Wisconsin. Many libraries and city halls around the state save taxpayers’ dollars by using WisNet as their Internet provider. This change benefits private Internet service providers at an additional cost to taxpayers. At a time when both the Administration and the Legislature are preaching government frugality, it doesn’t make sense to take away some of the very tools local governments use to reduce spending. We urge the Legislature to reverse these JFC amendments.

If there is one lesson we can take away from this fight, it is the need to build strong networks that can quickly respond to the tricks companies like AT&T can do in their power-center: state capitals and DC. This provision was obviously intended to benefit AT&T and a few other companies at the expense of all Wisconsin, particularly its schools and libraries. But WiscNet and defenders responded quickly and powerfully to the attack. And when they did respond, they did so with various arguments, including the cost to libraries and schools. If you can't tell a legislator how it impacts a budget somewhere, you probably aren't being heard.