Tag: "cable"

Posted April 23, 2010 by christopher

David Pogue, a NY Times Tech columnist, recently wrote about a partnership between cable companies to share Wi-Fi access points:

I, a Cablevision customer, can now use all of Time Warner’s and Comcast’s hot spots in these three states. If you have Time Warner’s Road Runner service at home, you’re now welcome to hop onto Cablevision’s Optimum hot spots wherever you find them, or Comcast’s Xfinity hot spots. And so on. It’s as though all three companies have merged for the purpose of accommodating your Wi-Fi gadget, hugely multiplying the number of hot spots that are available to you.

The companies call this kind of partnership “the first of many.”

Now, I think this development is fantastic. It hits me where I live. It’s free. It’s fast and reliable. I love it.

He goes on to ask, what's in it for them? Apparently, David Pogue has little understanding of how dominant firms work together to cement their power and limit competition.

He then put up a post with an answer from an insider:

“David, widely available WiFi makes our service better, and more useful and valuable,” he wrote. “And we don’t compete directly with TWC or Comcast for high-speed Internet customers; we compete with phone companies that offer a wide array of services, including data plans over increasingly over-burdened and sluggish cellular networks for an extra $60 per month."

Bingo. Big cable companies do not compete with each other - one suspects these companies have tacitly divided the national cable market with an understanding that they will not overbuild each other. The barriers to entering the cable/broadband market are already substantial: any new network requires a massive upfront capital expenditure. This Wi-Fi partnership with cable incumbents makes that barrier even larger.

Let's imagine that a city wants to build a publicly owned network that will compete with one of these companies. Customers of the private incumbent have Wi-Fi access all over the place, across three states - and probably more to come. The incumbent gets the benefit of investments from other cable cos in the partnership.

Any guesses on whether the publicly owned network will be...

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Posted December 1, 2009 by christopher

It looks like Palo Alto should move quickly on expanding its publicly owned fiber-based I-NET - as the city renegotiates the cable franchise with Comcast, the private cable company is trying to rip-off taxpayers with exorbitant prices for community anchor tenants.

California is one of several states to recently take negotiating power on cable television franchises away from communities and grant it to the state. Historically, communities negotiated a free or reduced rate for connectivity to schools, public safety buildings and other key community anchors in return for access to community Right-of-Way - an essential permission necessary to build a cable network.

However, as these agreements come up for review, the regulatory landscape is significantly different than it was when they were negotiated in the past. Federal and state decisions have limited the power of communities to gain concessions from cable companies as they continue to raise prices and post large profits.

In response, many communities have embarked on smart efforts to build their own fiber-optic networks connecting key institutions. These networks often save money while greatly increasing available bandwidth, allowing local governments to be more efficient and use cutting-edge applications. In some communities, these Institutional Networks have formed the backbone of next-generation networks that extend full fiber-to-the-home network access to businesses and citizens. Palo Alto has not yet connected all the necessary buildings with its network and still depends on Comcast for bandwidth to those areas.

Communities should beware - network ownership means power. The network owner can decide what price to charge schools - prices that must be paid with tax dollars. Communities building their own networks have slashed these prices and reduced pressure on the tax base. They don't have to worry as much when cable franchise negotiations are up again - like Palo Alto is now.

Joe Saccio, deputy director of Palo Alto's Administrative Services Department, said Comcast's proposed rates for I-Net would essentially enable the cable company to bill the communities twice for the fiber network. The network's construction was funded by cable subscribers and according to the staff report, Comcast has already largely (if not completely) recouped those costs.

"It's felt...

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Posted November 2, 2009 by christopher

Tacoma's Click! network, which recently celebrated its 10th anniversary, has announced a coming price hike to cover increased costs for carrying channels.

Tacoma's Click! network is a long-standing example of a community coming together to solve a common problem - ensuring they have the telecommunications infrastructure necessary for success in the modern world. Being built before FTTH was viable, the network is a combination of fiber and coaxial cable.

More importantly, they have enacted important rules to ensure everyone has access to the network:

Click’s low-income and senior customers will continue to receive a 20 percent discount, Anderson added.

The reason for the price increase is not to generate profits for absentee shareholders, but due to an increase in programming costs:

Click officials said the primary driver behind the proposed customer rate increases is newly imposed “retransmission” fees by local broadcasters. In all, Click faces about $750,000 of the new fees in 2009 and 2010, Wykstrom said.

Facing declining advertising revenues and increased costs caused by the recent change to all-digital formats, local broadcasters required the payments when negotiating new agreements with Click, officials said. In the past, local broadcasts were provided free of charge to Click.

“They basically held us hostage,” said Diane Lachel, Click’s government and community relations manager.

Posted October 13, 2009 by christopher

Not too far away from Chattanooga, Tennessee, (home to the largest muni fiber network in the U.S.) lies Cleveland (Tennessee). Five prominent residents asked why they cannot get broadband:

The homeowners have discussed the problem with Charter Communications Director of Government Relations Nick Pavlis three times.

Pavlis said in a telephone interview it would cost the cable company $130,000 to run an underground cable 2 1/2 miles and “it’s just not a reasonable payback.”

He said the company spends $500 per house as a general rule, which gives them a 36-48 month return on investment.

Yet Charter has no problem lobbying the states to prohibit publicly owned networks. Tennessee probably has more fiber-to-the-home initiatives than any other state - perhaps it is time Cleveland looked into their own or cajoling a nearby network into expanding.

Posted July 27, 2009 by christopher

After winning the election, the Obama Administration announced that broadband networks would be a priority. True to its word, the stimulus package included $7.2 billion to expand networks throughout the United States. A key question was how that money would be spent: Would the public interest prevail, or would we continue having a handful of private companies maximizing profits at the expense of communities?

Creating the Broadband Stimulus Language

The debate began in Congress as the House and Senate drafted broadband plans as part of the American Recovery and Reinvestment Act

The House language on eligibility for stimulus grants made little distinction between global, private entities and local public or non-profit entities.

the term `eligible entity' means--

(A) a provider of wireless voice service, advanced wireless broadband service, basic broadband service, or advanced broadband service, including a satellite carrier that provides any such service;
(B) a State or unit of local government, or agency or instrumentality thereof, that is or intends to be a provider of any such service; and
(C) any other entity, including construction companies, tower companies, backhaul companies, or other service providers, that the NTIA authorizes by rule to participate in the programs under this section, if such other entity is required to provide access to the supported infrastructure on a neutral, reasonable basis to maximize use;

The Senate language clearly preferred non-profit or public ownership.

To be eligible for a grant under the program an applicant shall—

(A) be a State or political subdivision thereof, a nonprofit foundation, corporation, institution or association, Indian tribe, Native Hawaiian organization, or other non-governmental entity in partnership with a State or political subdivision thereof, Indian tribe, or Native Hawaiian organization if the Assistant Secretary determines the partnership consistent with the purposes this section

The final language, adopted by the Conference Committee and passed by both houses in February was a compromise. It favored a public or non-profit corporation but allowed a private company to be eligible only if the Assistant Secretary of the Department of Commerce found that to be in the public interest. In the final law an eligible...

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Posted June 11, 2009 by christopher

Doris Kelley takes a look at one of the early citywide publicly owned broadband systems - Cybernet in Cedar Falls, Iowa. Cybernet is run by CFU and is an HFC (cable) network that also offers some fiber-optic connections for businesses. In this paper, Kelley takes a look at some of the benefits the network has brought to the community.

From the start of the paper:

Cedar Falls Utilities, the largest municipally owned four-service utility in Iowa, provides electric, natural gas, water and communications services to a community of over 36,000 people. The citizens of Cedar Falls have been and continue to be the driving force behind Cedar Falls Utilities. Because of citizen demand and involvement, what once began as an unreliable water supply from “Big Springs,” a small light plant built with discarded bricks and an outdated manufactured gas system, has grown into an organization that is recognized nation-wide in the utility industry for outstanding performance management and some of the most favorable utility rates in the country.

Cedar Falls Utilities (CFU) is a strong supporter of economic development. Through the years, the Cedar Falls community has directly benefited by the operation of its municipally owned utilities through direct customer rate savings, free or special customer service programs and fund transfers to the City’s general fund.

CFU has made great strides to further its commitment to economic development. In 1994, a new horizon was encouraged through visionary thinking. Considerable strategic planning and analysis preceded the decision to design, construct and operate a Broadband Fiber Optic Communications System. The Cedar Falls Board of Trustees spent approximately 24 months studying the technical and financial feasibility of constructing and operating such a network. Finally, on October 24, 1994, the Cedar Falls City Council adopted ordinance No. 2072 forming the country’s second Municipal Communications Utility and transferring authority to the Cedar Falls Utilities Board of Trustees.

Posted May 18, 2009 by christopher

This paper provides evidence that municipally owned and operated cable television enterprises are financially viable and provide large rate savings to their communities. The findings contradict allegations in Costs, Benefits, and Long-Term Sustainability of Municipal Cable Television Overbuilds, a 1998 paper authored by Ronald J. Rizzuto and Michael O. Wirth, that such enterprises are likely to be poor investments for cities. The authors claim that analysis of financial histories of the cable enterprises in Glasgow (Kentucky), Paragould (Arkansas), and Negaunee (Michigan) “clearly indicates that [they] have been poor investments from a pure business perspective.” They are pessimistic about the fourth, Cedar Falls (Iowa). The authors contend that these enterprises “have not generated [or will not generate] sufficient cash flows to cover their out of pocket cash needs.... None ... [is] currently sustainable over the long run.” However, by the incorrect criteria and analysis that Rizzuto and Wirth use, few new enterprises—public or private—would pass financial muster. The authors further contend that the only reason these utilities have been able to remain solvent is because of various subsidies, personal and property tax transfers, or interest-free loans. Rizzuto and Wirth’s conclusions are not surprising since their paper was partially funded by Telecommunications, Inc. (“TCI”), the private, incumbent cable television provider in Cedar Falls at the time the city was creating its municipal cable enterprise. Although Rizzuto and Wirth’s paper was published seven years ago, critical review of it is timely and important. Formation of municipal cable enterprises is a major public policy issue; private broadband providers have been successful in having several states bar or place crippling limitations on the formation of such enterprises. The time that has elapsed since the paper was published provides a good perspective for checking the authors’ predictions about the financial viability of the four municipal enterprises. Most importantly, however, Rizzuto and Wirth’s paper is often cited currently by those who oppose municipal entry in the cable television industry and related broadband industries. Their paper is widely quoted in reports of other organizations that oppose formation of municipal cable enterprises.

Posted April 27, 2009 by christopher

These are funny old advertisements that rightly note one of the largest problems with cable networks: bandwidth is shared among hundreds of houses. Of course, DSL is hardly better. We need full-fiber networks that are accountable to the community. Found at FiberEvolution.com

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