Tag: "economics"

Posted August 10, 2016 by christopher

As the next President considers how to improve rural Internet access, the administration will have to decide where to focus policy. Some at NTIA - the National Telecommunications Information Administration, a part of the federal Department of Commerce - have argued for more middle mile investment. NTIA oversaw major investments in middle mile networks after the stimulus package passed in 2009.

To discuss the relevance of middle mile investment against last mile investment, we brought Fletcher Kittredge back, the CEO of GWI in Maine. Fletcher has extensive experience with both middle mile and last mile investments.

We talk about whether more middle mile will actual incent last mile investment and, more importantly, how to build middle mile correctly to get the best bang for the buck. Along those lines, we talk about avoiding cherry-picking problems and one of my favorites, how to ensure that rural investment does not inadvertently promote sprawl.

Read the transcript of this episode here.

We want your feedback and suggestions for the show-please e-mail us or leave a comment below.

This show is 30 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

You can download this mp3 file directly from here. Listen to other episodes here or view all episodes in our index.

Thanks to Roller Genoa for the music, licensed using Creative Commons. The song is "Safe and Warm in Hunter's Arms."

Posted May 25, 2016 by christopher

In our experience, just about every community considering building a community network considers open access. They want to enable new choices for services and often would prefer the local government avoid directly competing with existing service providers, for a variety of reasons. However, we are only tracking 30 open access networks on our just-released Open Access resource page.

Many of the communities that start off enthusiastic about open access ultimately decide to have a single service provider (themselves or a contractor) to have more certainty over the revenues needed to pay operating expenses and debt. We believe this will change as the technology matures and more communities embrace software-defined networks (SDN) -- but before tackling that topic, we think it is important to discuss the meaning of open access.

On a regular basis, I get an email from one deep-thinking person or another that says, "That network isn't really open access." They almost always make good points. The problem is that different people embrace open access for different reasons - they often have different expectations of outcomes. Understanding that is key to evaluating open access.

How Many ISPs?

One of the key questions centers on how many providers a household is likely to be able to choose from. Various factors, including the network architecture and economics of becoming a service provider, will influence this outcome.

Some communities simply seek to avoid a monopoly network - they are focused on the idea of potential competition. For instance, we believe Huntsville's model and agreement with Google can be considered open access because any party could lease fiber from the utility to compete with Google. However, we believe the costs of doing so by using that network architecture make robust competition unlikely.

If Google is a strong competitor in Huntsville, they will likely not face significant competition from other ISPs on the utility fiber though AT&T and Comcast will still use their networks to compete. But in the event that Google is not a strong competitor, the door will be open to other ISPs to give people a better choice. It is extremely unlikely that this arrangement would give residents many choices for Internet access... Read more

Posted March 26, 2015 by lgonzalez

Hudson is moving ahead with plans to develop a publicly owned fiber network, reports the Hub Times. The City Council recently approved a contract with a consultant to develop a conceptual design, implement the plan, and recruit service providers interested in operating over an open access network.

In January, the town of about 23,000 conducted a residential and business survey to determine the overall state of broadband in the community. At a February meeting, the Council reviewed the survey results. Almost 1,000 residents and 133 businesses answered the survey which revealed that Internet services were lacking in coverage, speed, performance, and reliability. From a February Hub Times article:

Hudson's small and medium business community reported many issues with their current broadband services, citing poor reliability and performance as negatively affecting their ability to do business in the city. Many businesses wanted to upgrade to a better service but found that they could not afford to do so.

Consultants recommend building off the community's fiber I-Net to improve connectivity for local businesses. According to the city's Broadband Needs Assessment and Business Plan, Hudson will also consider offering services as a retail provider if no ISPs express interest in using an open access city infrastructure.

If the city  decides to pursue the open access model, consultants estimate Hudson will need to spend approximately $4.9 million to four commercial areas of town. With the added expenses and responsibilities as a retail provider, the costs would likely run closer to $6.5 million. The plan suggests deploying to businesses first and later add a residential buildout.

Posted March 20, 2015 by lgonzalez

We are pleased to bring you a guest post from Levi C. Maaia, president of Full Channel Labs and a graduate research fellow at the Center for Education Research on Literacies, Learning & Inquiry in Networking Communities (LINC) at the University of California, Santa Barbara. Levi is a strong advocate for local, family owned businesses and an open Internet without government or corporate gatekeepers.

The Other Half of Net Neutrality Regulation

The Internet was originally founded on principles of public service and education. In the past two decades, tremendous commercial potential has also been realized and the Internet is now the engine behind our new global economy. This potential, however, is predicated on the network’s original open and neutral methods of communication. 

Properly implemented net neutrality regulation has the potential to maintain a level online playing field for all 21st century industries, which rely on the Internet for all types of electronic communications and financial transactions. However, Chairman Wheeler's recent plan to enforce net neutrality through the invocation Title II authority ignores practices by some content providers that threaten the economic viability and expansion of affordable high-speed and gigabit access. A notable example of this practice is how online content is delivered under the ESPN3 brand.  

ESPN3 is an online-only sports television network owned by The Walt Disney Company and the Hearst Corporation. Unlike with other online video services such as Netflix and Amazon Instant Video – where consumers choose to pay for content and access it directly – ESPN3 streaming content is available only to customers of ISPs that pay per-subscriber fees to ESPN for each of their Internet customers. If an ISP refuses to pay these fees for some or all of its user base, all of its customers are blocked from accessing ESPN3’s online content. Through the imposition of this legacy cable TV licensing approach ESPN3 is attempting to force ISPs into negotiating content deals in the same way that cable TV providers must do for broadcast retransmission consent and cable network licensing fees.  

As cord-cutters drop their cable and satellite subscriptions in favor of online streaming, TV networks are scrambling to compensate for this lost revenue.  ESPN3 is doing so by imposing a cable TV-like... Read more

Posted July 8, 2014 by christopher

Longmont is about to break ground on the citywide FTTH gigabit network but it is already offering services to local businesses and a few neighborhoods that started as pilot projects. Vince Jordan, previously a guest two years ago, is back to update us on their progress.

Until recently, Vince was the Telecom Manager for Longmont Power and Communications in Colorado. He has decided to return to his entrepreneurial roots now that the utility is moving forward with the citywide project. But he has such a great voice and presence that we wanted to bring him back to share some stories.

We talk about Longmont's progress and how they dealt with a miscalculation in costs that forced them to slightly modify prices for local businesses shortly after launching the service. And finally, we discuss the $50/month gigabit service and how Longmont has been able to drive the price so low.

You can read our full coverage of Longmont from this tag.

Read the transcript from our discussion here.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

This show is 20 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Find more episodes in our podcast index.

Thanks to Waylon Thornton for the music, licensed using Creative Commons. The song is "Bronco Romp."

Posted July 2, 2014 by tanderson

This is the first in two-part series on spectrum basics and how we could better manage the spectrum to encourage innovation and prevent either large corporations or government from interfering with our right to communicate. Part 2 is available here.

We often think of all our wireless communications as traveling separate on paths: television, radio, Wi-Fi, cell phone calls, etc. In fact, these signals are all part of the same continuous electromagnetic spectrum. Different parts of the spectrum have different properties, to be sure - you can see visible light, but not radio waves. But these differences are more a question of degree than a fundamental difference in makeup. 

As radio, TV, and other technologies were developed and popularized throughout the 20th century, interference became a major concern. Any two signals using the same band of the spectrum in the same broadcast range would prevent both from being received, which you have likely experienced on your car radio when driving between stations on close frequencies – news and music vying with each other, both alternating with static. 

To mitigate the problem, the federal government did what any Econ 101 textbook says you should when you have a “tragedy of the commons” situation in which more people using a resource degrades it for everyone: they assigned property rights. This is why radio stations tend not to interfere with each other now.

The Federal Communications Commission granted exclusive licenses to the spectrum in slices known as bands to radio, TV, and eventually telecom companies, ensuring that they were the only ones with the legal right to broadcast on a given frequency range within a certain geographic area. Large bands were reserved for military use as well.

Originally, these licenses came free of charge, on the condition that broadcasters meet certain public interest requirements. Beginning in 1993, the government began to run an auction process, allowing companies to bid on spectrum licenses. That practice continues today whenever any space on the spectrum is freed up. (For a more complete explanation of the evolution of licensing see this excellent Benton foundation blog post.)

Although there have been several redistributions over the decades, the basic architecture remains.... Read more

Posted May 6, 2014 by christopher

The Open Technology Institute at the New America Foundation, along with ctc Technology and Energy, have released an overview of options for local governments that want to improve Internet access. The report is titled, "The Art of the Possible: An Overview of Public Broadband Options."

The paper has been released at an opportune time, more communities are now considering what investments they can make at the local level than ever. The Art of the Possible offers different models, from muni ownership and partnerships to coops. The paper examines different business models and assesses the risk of various approaches.

It also includes a technical section for the non-technical to explain the differences between different types of broadband technology.

From the introduction:

The one thing communities cannot do is sit on the sidelines. Even the process of evaluating whether a public network is appropriate can be beneficial to community leaders as a means to better understand the communications needs of their residents, businesses, and institutions and whether existing services and networks are keeping pace.

The purpose of this report is to enable communities to begin the evaluation of their broadband options. The report begins with an overview of different network ownership and governance models, followed by an overview of broadband technologies to help potential stakeholders understand the advantages and disadvantages of each technology. It then provides a brief summary of several different business models for publicly owned networks. The final two chapters focus on the potential larger local benefits and the risks of a publicly funded broadband project.

Posted March 2, 2014 by christopher

We should probably be thanking Comcast for its attempt to take over Time Warner Cable. It has inspired a shocking amount of vitriol against the cable monopolies, including an entertaining but NSFW video with strong language from Funny or Die.

Whereas people were largely content to mostly silently hate Comcast and Time Warner Cable separately, the idea of them officially tying the knot to screw consumers even more has apparently hit a tipping point. As I noted a few days ago, we are seeing a more communities considering their own networks to avoid being stuck with a Wall Street monopoly forever.

Paul Krugman was inspired to write "Barons of Broadband," which accurately reflects the modern dynamic:

The point is that Comcast perfectly fits the old notion of monopolists as robber barons, so-called by analogy with medieval warlords who perched in their castles overlooking the Rhine, extracting tolls from all who passed. The Time Warner deal would in effect let Comcast strengthen its fortifications, which has to be a bad idea.

Krugman talks about monopoly as well, reminding me of one of our most important podcasts - Barry Lynn, Monopoly Expert.

And the same phenomenon may be playing an important role in holding back the economy as a whole. One puzzle about recent U.S. experience has been the disconnect between profits and investment. Profits are at a record high as a share of G.D.P., yet corporations aren’t reinvesting their returns in their businesses. Instead, they’re buying back shares, or accumulating huge piles of cash. This is exactly what you’d expect to see if a lot of those record profits represent monopoly rents.

It’s time, in other words, to go back to worrying about monopoly power, which we should have been doing all along. And the first step on the road back from our grand detour on this issue is obvious: Say no to Comcast.

There is no public benefit to this merger - none. Meanwhile it will give even more power to a corporation already slowing our economy by refusing to invest in... Read more

Posted January 28, 2014 by christopher

When we think about the threat of monopoly, we almost always focus on how monopolies can raise prices beyond what is reasonable. But there are many threats from monopolies and many are much more dangerous to a free society than higher prices. This week, monopoly expert Barry Lynn joins us for the Community Broadband Bits podcast.

Lynn is a senior fellow at the New America Foundation and author of a book that I recommend very highly - Cornered: The New Monopoly Capitalism and the Economics of Destruction. Buy it a local bookstore or from an independent bookstore online.

We discuss whether companies like Comcast are correctly termed "monopoly" when they face some nominal competition and what the threat from monopoly is. Barry explains how both political parties have encouraged centralization even as both parties have had vocal opponents of such policies. And finally, we discuss how policies dealing with monopoly now are fundamentally different than they were for the vast majority of American history.

This is a great discussion - one of the most important we have done. You can read a transcript of our discussion here.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

This show is 20 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Find more episodes in our podcast index.

Thanks to Haggard Beat for the music, licensed using Creative Commons.

Posted May 17, 2013 by lgonzalez

Joanne Hovis, President of CTC Technology and Energy, recently published a must-read article in Broadband Properties Magazine. Whether you are a community leader investigating the possibility of a publicly owned network or an engaged citizen looking for pros and cons, this piece explains practical benefits succinctly. In her article, The Business Case For Government Fiber Networks [PDF], Hovis looks at life beyond stimulus funding. She points out how we should evaluate municipal networks in an environment where shareholder profit is not the first consideration.

Hovis gives a brief history of how local communities reached this point of need. As many of our readers know, local communities used to be able to negotiate with cable providers for franchise opportunities and rights-of-way. Often cable providers would construct broadband infrastructure in exchange for a franchise to operate in a given community, creating I-Nets for local government, schools and libraries. Once states inserted themselves into the process with state-wide franchising, local negotiating power evaporated. Many of those franchise agreements are ending and local leaders are considering municipal fiber optic networks.

Hovis stresses that municipalities do not function in the same environment as the private sector. While they still have a fiscal responsibility to their shareholders (the taxpayers) the main function is providing public safety, encouraging economic development, offering education, and using tax dollars to better the quality of life. Hovis describes how redefining return on investment (ROI) needs to go beyond the balance sheet bottom line. 

These benefits have nothing to do 
with traditional financial measures. Rather, they represent the return 
to the community in terms of such largely intangible societal benefits 
as enhancing health care quality, narrowing the digital divide, providing enhanced educational opportunities to school children, delivering job search and placement opportunities at public computer centers and helping isolated senior citizens make virtual social connections.

joanne-hovis.jpg

Even without the intangible benefits, Hovis argues the financial... Read more

Pages

Subscribe to economics