Tag: "rural"

Posted January 26, 2011 by christopher

The fiber-to-the-farm initiative in Sibley County, Minnesota, has completed the feasibility study and the towns involved are discussing a Joint Powers Agreement. One of the impacted incumbent providers -- Frontier Communications, a rural telco famous for slow DSL) -- has started to spread the usual FUD (fear, uncertainty, and doubt) that is common whenever a massive company is about to face competition.

Though I am tempted to comment directly on Frontier's letter, I'll let the community's response stand on its own. The way they misrepresent the record of Windom should be instructive - this same misinformation strategy is used around the country.  We believe publishing these scare tactics and responses to them is helpful to everyone -- so if your project has received one, please let us know.

Frontier's Letter:

Dear Commissioners:

As a provider of telephone, internet, and video services to our customers in the Green Isle, Arlington, and Henderson areas, Frontier Communications is obviously interested in the "fiber to the home" proposal that has been presented. As a nationwide provider, Frontier is aware of other efforts by municipalities of various types to build and operate their own telecommunications network. While these proposals are always painted in rosy tones, it is important for officials to carefully review the underlying assumptions and projections that consultants make when presenting these projects. Unfortunately, history tells us that the actual performance of most of these projects is significantly less positive than the promises. Often times, these projects end up costing municipalities huge amounts of money, and negatively impact their financial status and credit ratings.

A nearby example would be WindomNet, the city-owned network in Windom, Minnesota. That network, which provides telephone, internet, and video service, began in 2005. The financial results to date have been poor; operating losses of $662,000 in 2006, $1,257,000 in 2007, $326,000 in 2008, and $93,000 in 2009. Additional borrowing by the city was required to make up those losses.

Another example is the city-owned network in Burlington, Vermont. Burlington Telecom was begun with high hopes in 2003, to offer...

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Posted January 20, 2011 by christopher

MuniNetworks.org is happy to welcome a new contributor to the site, Mitch Shapiro.  Mitch will author pieces from time to time, the start of our efforts to broaden the contributions to and reach of MuniNetworks.org.  If you are interested in contributing on a one-time or semi-regular basis, please let us know at broadband@muninetworks.org.

Mitch Shapiro has been an analyst, author and consultant in the telecom, media and broadband industries for more than 25 years. His interest in community-controlled networks dates back to his graduate school days at Michigan State University, which included two internship in Washington DC, the first helping to draft a manual for local communities wanting to deploy a cable TV cooperative, the second working for Intelsat, a cooperatively organized global satellite network. That interest remains strong today, and is informed by more than two decades of experience analyzing broadband technologies, business models, competitive dynamics and economic impacts.

Mitch currently serves as CEO of Broadband Market Analysis, a research and consulting firm, and Rural Fiber Works, which supports cooperative and municipal utilities in developing strategies for open-access community fiber networks. He is also a consultant with Strategic Networks Group, a leader in helping public and private entities understand and maximize the economic benefits of broadband networks.

Throughout his career, Mitch has been a leader in recognizing and projecting the impacts of key industry developments. In the mid-1980s, as Research Director of the Michigan Citizens Lobby, he managed a statewide study of the impacts of the AT&T divestiture on Michigan’s low-income households. In the late 80s and early 90s, as lead technology analyst for Paul Kagan Associates, he was early to recognize the significance of the cable industry’s migration to the “hybrid fiber coaxial (HFC)” architecture, which enabled it to expand from a TV-only service to today’s “triple-play” of voice, video and Internet. Shortly after passage of the 1996 Telecom Act, Mitch authored a 375-page report published by Probe Research, which projected the financial impacts of the legislation on cable and telephone companies, including the role of then-emerging broadband and “triple-...

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Posted January 14, 2011 by christopher

Last night, local officials from all over Sibley County gathered in Arlington to learn about the potential fiber-to-the-farm broadband network they could build as early as 2012. Dave Peters, from Minnesota Public Radio, attended and discussed the meeting on MPR's Ground Level blog.

More than 50 elected officials -- county commissioners, city council members, township board supervisors -- gathered in the Arlington Community Center last night to inch ahead a plan to lay fiber optic lines to every home and business in the county plus those in and around neighboring Fairfax in Renville County.

It's an ambitious plan that would require the community to borrow $63 million and then pay off those bonds with revenue from the service. The county-owned operation would offer the usual cable-phone-Internet triple plays, and backers are promising that right out of the gate it would be at a speed of 20 megabits per second, upload and download. That's quite a bit faster than what area residents get now via DSL or cable or wireless.

If the project will move forward, the communities will have to form a Joint Powers Board and seed it with some start-up funds. The next steps will be to do a pre-subscription campaign to get a real sense of how many residents would take service from a new network. Responses are non-binding but will give a better measure of support as well as create an additional sense of responsibility for the project. From Dave Peters:

By the end of February, the 10 governments -- Sibley and Renville counties and the cities of Gaylord, Arlington, Winthrop, Fairfax, Henderson, Gibbon, Green Isle and New Auburn -- will each decide whether they want to create a joint powers board.

The best scenario is that all communities would join. But if one or a few do not, the project may be able to continue as long as some of the remaining communities are willing to take additional risk (which would be rewarded with a higher percentage of net income down the line). As long as the JPA is able to continue, all communities will still be passed by the network and residents able to subscribe. The exception is Sibley County itself; if the County does not join, the project would be hard-pressed to run the fiber out to the farmers...

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Posted January 12, 2011 by christopher

A group of towns in rural western Massachusetts, having already decided on a cooperative structure, have now started the process of joining the coop in order to eventually build an open access FTTH network to serve everyone in each of the member towns.

Originally, the Wired West towns looked to a similar project in Vermont, East Central Vermont Fiber Network, for guidance but found Massachusetts law did not allow them to use the same joint powers agreement approach. After researching Massachusetts law, they found a law previously used by towns to form "light plants" for electrification. In more modern times, the law had been amended to allow such an entity to offer cable television and telecom services. Of the forty muni light plants in Massachusetts, some four provide telecom services.

In order to join the coop, a town has to twice pass a 2/3 vote by those in attendance at a town meeting. The meeting must be no less than 2 months apart and no more than 13 months apart. In talking with folks from Wired West, this approach appears to be unique to Massachusetts.

From the Wired West site:

Passing the MLP legislation creates a new town department, and does not require a town to produce or sell electricity. The Selectboard can choose to oversee its MLP department themselves or appoint a three to five member board. This group is responsible for appointing a manager, making decisions around the town’s participation and representation in the WiredWest Cooperative, and filing annually with the State.

Creating the MLP incurs no cost to the town. If a town decides to join the WiredWest Cooperative, there will be a membership fee of not more than $1,000 per town.

The coop requires at least 2 towns, but that does not appear to be doubt. The towns to consider it thus far have been enthusiastic - Wired West has a helpful map showing where local towns stand in the process. In general, Wired West is an excellent example of how community groups can use a website to keep people...

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Posted January 7, 2011 by christopher

New Update: Mediacom has invented language in the Joint Power Agreement and threatened the Mayors of Silver Bay and Two Harbors. Let's see how dirty Mediacom will get to prevent competition.

Lake County, recipient of a broadband stimulus award to build a rural county-wide (larger, actually) fiber-to-the-home network, has been wrestling with questions they have related to the problems at Burlington Telecom. After some lazy reporting in the Star Tribune and Duluth News Tribune exaggerated Tim Nulty's role in the problems Burlington Telecom now faces, some on the County Board began asking more questions of National Public Broadband (of which Tim is CEO).

I attended a meeting after Christmas to observe the discussion, share our understanding of the situation, and discuss the experiences of other community networks. Next week, the County Board plans to decide whether they will alter the arrangement with National Public Broadband or possibly seek another partner in the project -- a development that may have implications for changes or revocation of the stimulus funding.

It is important to note that due to structural differences, the problems in Burlington (which, at the least, were hidden from the public allowing them to snowball) are extremely unlikely to repeat in Lake County.

The Lake County Chronicle has published a lengthy editorial responding to concerns and noting the ramifications of any changes to the partnership with National Public Broadband. As of this writing, it is not yet behind a pay wall.

It offers some wise thoughts:

Like the debate over whether the meetings being held to draw up the rollout plans for the county should be public or private, NPB needs to better apply the rules of working within the expectations of open government. We demand transparency and a full accounting of tax dollars.

It’s fair to wonder, as some board members did last week, just what NPB would withhold from the board if things don’t go swimmingly with the Lake County plan. All adjustments, all bumps along the road, need to be publicly and fully discussed.

The county can use NPB’s disclosure...

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Posted January 3, 2011 by christopher

Ontario County was working on a publicly owned solution to Middle Mile long before the broadband stimulus approach made it popular. And now, before most of the stimulus money has been disbursed, they have completed an expanded version of their initial plan.

To date, Axcess Ontario has signed master agreements with eight telecom and broadband companies, including Verizon Wireless and national broadband provider tw telecom. Axcess Ontario is in continual discussions with other service providers, and is working aggressively on its next goal of luring a fiber-to-the-home (FTTH) service provider to Ontario County. With the fiber ring complete, businesses and municipalities now have access to faster and less expensive broadband, as well as bandwidth equal to global broadband leaders. Businesses can gain access to the ring simply by contacting any of the eight service providers that work with Axcess Ontario. Residents do not yet have access to faster and less expensive broadband, but they will once a FTTH service provider is secured. Axcess Ontario has been working to lure a FTTH provider for more than a year, including submitting an application on behalf of Ontario County, NY, to Google's "Fiber for Communities" ultrafast broadband project earlier this year. More than 1,100 communities nationwide responded to that project, and Google just announced last week that it was postponing its selection of winning communities to early 2011.

We will be interested to see if they can lure a FTTH provider -- though middle mile can lower the operating costs of providing such a service, the capital costs are not significantly changed. And with the robust middle mile already connecting community anchor institutions, a new FTTH provider cannot count on those high-revenue customers. We have seen this previously in Alberta, Canada. Axcess Ontario is an example of a good public-private partnership - as noted in Telecompetitor:

Axcess Ontario credits much of its $2 million cost savings to a lease agreement with Ontario Telephone Co., an incumbent local carrier.

...
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Posted December 8, 2010 by christopher

BVU, which operates OptiNet (the nation's first triple-play muni FTTH network), has transitioned from being owned by the City to being an independent authority. In its last fiscal year (2010-11), the public power utility finished with net income.

OptiNet finished ahead of projections.

Having split from the city, BVU is taking advantage of the Virginia Resource Authority to issue $44 million revenue bonds to refinance its debt.

“We’re going through the VRA pool which helps fund 88 cities and service authorities. Because of that – and because of the market – we’re potentially looking at very low interest rates of 3.3 percent,” Rose told the board during his presentation.

The debt currently has an interest rate approaching 5%. After refinancing, the utility expects to save some $500,000 to $750,000 a year - for a period of 20 years. The cost of refinancing is $900,000.

This story is worth noting for two reasons:

  1. Restructuring debt is not necessarily a sign of weakness -- BVU's OptiNet is quite successful.
  2. A reminder that small communities can benefit significantly by pooling bonding through programs like Virginia's VRA. States should help communities to work together in this way.
Posted December 3, 2010 by christopher

The Chelan Public Utility District in Washington state is upgrading network capacity as it starts expanding the network following its broadband stimulus award. We previously covered their consideration of whether to expand from passing 80% of the territory to 98%.

Chelan is one of the most rural publicly owned fiber networks as well as one of the oldest ones. In a rarity, it looks likely to run in the red permanently (the pains of rural, mountain terrain) with the support of most ratepayers. These ratepayers recognize the many benefits of having the network outweigh its inability to entirely pay for itself. The utility also runs a sewer project that is subsidized by wholesale electricity sales. Though some areas in Chelan are served by Charter and Frontier, the more remote folks would have no broadband access if not for the PUD.

With the planned upgrades in 2011, Chelan's open access services will offer far faster speeds than available from the cable and DSL providers. Under Washington law, the PUDs cannot sell telecommunications services directly to customer. The PUD builds the network infrastructure and allows independent service providers to lease access while competing with each other for subscribers. Though this is a great approach for creating a competitive broadband market, it has proved difficult to finance (if one believes this essential infrastructure should not be subsidized as roads are).

When the PUD considered whether to pursue the expansion (meaning taking a federal grant covering 75% of the costs and agreeing to run the network for 22 years), it asked the ratepayers for feedback:

Sixty-four percent of 450 randomly chosen Chelan County registered voters who were part of phone survey in August said they favor taking the grant and completing the buildout, even if it means their electric bills will go up by as much as 3 percent — about $1.50 more on a $50 per month power bill.

On November 9, PUD Commissioners approved the rate increase.

Chelan's service providers currently offer connections of 6Mbps/384kbps or 12 Mbps/384kbps. As with...

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Posted October 6, 2010 by christopher

In Virginia, Danville's open access all-fiber network, nDanville, currently serves only businesses and large clients. In the early summer, Danville Utilities decided to recommend expanding the network to between 2,000 and 3,000 residential homes with a 10 year, $2.5 million loan.

As Danville Utilities operates the network purely on a wholesale basis, it would not provide services directly. From an article leading up to the decision:

Danville Utilities would run the broadband services to the homes, to a box mounted on the house, and the user would pay a monthly service fee of $8.80 on their utility bill for the box. Gamewood would bill customers for the actual services provided, and pay the city 20 percent of those charges as an access fee for the cable.

Gamewood, a company that would have provided IPTV services on the network, had attempted to measure subscriber interest by mailing a postcard to 1000 local residents. The response failed to persuade at least one city council member, who demonstrated a total lack of understanding of the situation.

Luther bluntly said he had “no faith” in the numbers, and said he is convinced “nDanville is not going to fly.”

“If they want to build it, let Gamewood built it,” Luther said.

Of course, a private company is not interested in an investment that takes 5 years to break even. Even if it were, it would have little incentive to open the network to competition as nDanville does.

Ultimately, the City Council neglected to fund the project - perhaps an unsurprising decision in a time of economic woe. However, for a community like Danville, one wonders how it will recover without access to better broadband than last-generation cable and DSL services that are commonly available throughout the region.

The local paper editorialized in favor of the decision, but noted that the public power utility should continue expanding the network for commercial subscribers.

Posted September 27, 2010 by christopher

This looks interesting...

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