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Middle Mile vs Last Mile - Community Broadband Bits Podcast 214

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."

OK, Just What Does Open Access Mean Anymore?

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, but it is an improvement over the one or two pathetic incumbent options most of us face. Google is left with an incentive to meet user expectations, knowing that it could face competition if people are unsatisfied.

The UTOPIA model has resulted in many more choices for both businesses and residents, but most of those businesses are offering similar services at similar prices. The fact that it does not carry a "marquee" provider like Google or a national cable company on it may make brand awareness (and therefore marketing) more difficult, but it also provides opportunities for excellent local firms like XMission to thrive.

Simultaneous Services

This leads into a second question: can a premise subscribe to multiple service providers simultaneously or do they have to choose one? This may sound like a dumb question at first - why would you want to subscribe to two different ISPs? Aside from perhaps wanting video or phone services from one and Internet access from another, many are hoping to see more innovation on this front. We have written frequently on Ammon, Idaho, because they are doing some of the best work in this regard.

The ability to offer simultaneous services depends greatly on the underlying technology. Not all FTTH networks can give ISPs the tools they need to have confidence in delivering a high quality product reliably to their subscribers. Communities that want to ensure they have this capacity should pick a consultant that deeply understands these issues and has worked previously on open access.


The Holy Grail among those who prioritize this flavor of open access is to make it very easy for network subscribers to manage their own subscriptions - changing providers on the fly (and again, see Ammon for a model). This approach would allow ISPs to specialize and greatly encourage innovation, particularly for niche services. You might subscribe to an ISP that specializes in great connections for video games while also having a part of your connection dedicated to a home alarm system and still be able to initiate a high quality teleconference for health care that wasn't transported on the public Internet.

Market Entry Costs and Consequences

A key question about open access comes down to market entry costs. How much will it cost an ISP to serve potential subscribers? In Huntsville, the costs of building drops suggests it will still cost hundreds of dollars per sub, which is less than the $1,000+ per sub that it would likely cost to build a network from scratch.

We would generally expect that the lower the cost for an ISP to connect subscribers, the more ISPs would be on the network. However, there is an initially surprising problem that can arise when the cost to offer services is very low, something occasionally called "ruinous competition." This is used to various levels of seriousness but represents a common economic problem: if a product has little differentiation (like an ISP offering only Internet access), then subscribers are likely to decide on the ISP based solely on cost. Over time, ISPs will cut prices until the margin all but disappears, which runs most of the providers out of business (or they consolidate) and the competition effectively disappears.

One of the key points of the “ruinous competition” problem is whether ISPs are effectively providing the same thing (generic Internet access) or services (home security, remote backup, help desk, telemedicine, etc.). To the extent that they are offering different kinds of services, we can avoid that problem. However, it is not clear that most networks today are technically capable of allowing service providers to differentiate their services in any significant way, which is again why Ammon's forward-thinking software-defined networking approach is so important.

Like other aspects of technology, open access will evolve with innovation. For now, open access means different things to different people who are often seeking different outcomes.

Hudson Developing Plans for Muni Fiber Open Access Network in Ohio

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.

The Other Half of Network Neutrality - Content Neutrality

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 payment structure on Internet delivery using a model that congress and consumers have decried for decades as inflexible and expensive. These additional costs are already being factored into Internet service pricing, as ESPN3 reaches deals with the Internet providers of tens of millions of customers. If ESPN continues to be successful with this model, we can expect that other content providers will follow suit and it may not be just the cable TV networks that adopt this method. ISPs might be compelled to negotiate per-subscriber fees for access to content across the Web.

The FCC’s Network Neutrality approach means that ISPs cannot demand payment from content owners to reach customers. However, it is silent on whether content owners can demand the ISP pay a fee for every subscriber on its system, regardless of how many subscribers actually desire the content in question.

Without content neutrality protection as part of the FCC’s regulatory approach, we may see the current a-la-carte, merit-based model of the Internet disappear in favor of a system where payment demands for content are forced on consumers by media giants. This would likely result in skyrocketing prices for Internet access akin to that of cable TV which has risen in cost more than four times the rate of inflation over the past 15 years! This could have a crippling effect on all industry, especially small businesses and startups. Practices like those by ESPN3 pose just as great a threat to broadband and fiber deployment, affordability and access as a lack of other aspects of net neutrality regulation do. 

Indeed, content neutrality is the other half of the net neutrality issue and it must be addressed. And much like the fundamental issue behind network neutrality, a few incredibly large firms with tremendous market power are the primary threat.

In 2004, Levi Maaia joined Full Channel, a family-owned broadband provider in Bristol County, R.I. Under his leadership, Full Channel successfully turned around a declining subscriber base while making its first forays into digital and high-definition television, IP telephony and renewable energy solutions.  

In 2008, he developed and launched Full Channel’s renewable wind energy initiative GreenLink through a partnership forged with sustainable energy provider People’s Power & Light. As a result, cable industry trade publication CableFAX honored Full Channel with its 2009 Top Ops Community Service Award.  In 2012, Levi formed Full Channel Labs, an online innovation and technology partner, which develops and supports advances in networking and digital technologies.

Early Lessons from Longmont - Community Broadband Bits Podcast 106

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."

Wireless Commons Part 1: Interference Is a Myth, but the FCC Hasn't Caught on Yet

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. Communications companies own exclusive licenses for large swaths of the usable spectrum, with most other useful sections reserved for the federal government’s defense and communications purposes (e.g. aviation and maritime navigation). Only a few tiny bands are left open as free, unlicensed territory that anyone can use. 

NTIA Spectrum Map

This small unlicensed area is where many of the most innovative technologies of the last several decades have sprung up, including Wi-Fi, Bluetooth, Radio Frequency Identification (RFID), and even garage door openers and cordless phones. A recent report by the Consumer Electronics Association concluded that unlicensed spectrum generates $62 billion in economic activity, and that only takes into account a portion of direct retail sales of devices using the unlicensed spectrum. 

On its face, the current spectrum allocation regime appears an obvious solution; an efficient allocation of scarce resources that allows us to consume all kinds of media with minimal interference or confusion, and even raises auction revenues for the government to boot. 

Except that the spectrum is not actually a limited resource. Thanks to the constant evolution of broadcasting and receiving technologies, the idea of a finite spectrum has become obsolete, and with it the rationale for the FCC’s exclusive licensing framework. This topic was explored over a decade ago in a Salon article by David Weinberger, in which he interviews David P. Reed, a former MIT Computer Science Professor and early Internet theorist. 

Reed describes the fallacy of thinking of interference as something inherent in the signals themselves. Signals travelling on similar frequencies do not physically bump into each other in the air, scrambling the message sent. The signals simply pass through each other, meaning multiple signals can actually be overlaid on each other. (You don’t have to understand why this happens, just know that it does.) Bob Frankston belittles the current exclusive licensing regime as giving monopolies on colors. 

As Weinberger puts it:

The problem isn’t with the radio waves. It’s with the receivers: “Interference cannot be defined as a meaningful concept until a receiver tries to separate the signal. It’s the processing that gets confused, and the confusion is highly specific to the particular detector,” Reed says. Interference isn’t a fact of nature. It’s an artifact of particular technologies.

In the past, our relatively primitive hardware-based technologies, such as car radios, could only differentiate signals that were physically separated by vacant spectrum. But with advances in both transmitters and receivers that have increased sensitivity, as well as software that can quickly and seamlessly sense what frequencies are available and make use of them, we can effectively expand the usable range of the spectrum. This approach allows for squeezing more and more communication capacity into any given band as technology advances, without sacrificing the clarity of existing signals. In other words, (specifically those of Kevin Werbach and Aalok Mehta in a recent International Journal of Communications paper) “The effective capacity of the spectrum is a constantly moving target.”

In the next post, we’ll look at how we can take advantage of current and future breakthroughs in wireless technology, and how our outdated approach to spectrum management is limiting important innovation.

Open Technology Institute Report Offers Overview of Public Broadband Options

Publication Date: 
May 6, 2014
Ben Lennett, Open Technology Institute
Patrick Lucey, Open Technology Institute
Joanne Hovis, CTC Technology and Energy

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.

Krugman Calls out the Barons of Broadband

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 communities that desperately need better connections so businesses can remain competitive. Allowing this merger will be just another step in the direction of powerful corporate lobbyists officially running the country rather than unofficially.

The Real Threats from Monopoly - Community Broadband Bits Podcast #83

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.

Joanne Hovis on Business Plans for Municipal Fiber

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.


Even without the intangible benefits, Hovis argues the financial benefits to local communities cannot be ignored:

First, a government network can help avoid existing and future costs by replacing services for which the government previously paid third parties. Second, a network can bring revenues to a community, especially given new E-Rate regulations that make government networks eligible for subsidy if they serve schools and libraries. Together, these cost savings and revenue streams can add up to significant dollars – potentially to amounts that justify financing the necessary construction.

Hovis explains the economics of government need to lease circuits, an extremely lucrative practice for phone companies or providers. In addition to being expensive, Hovis notes they are often low-bandwidth. Hovis takes it one step further:

Build the network and you will shave this amount from your accounts payable.

In fact, because a government network can deliver far higher-capacity connectivity than the jurisdiction
 had previously leased, its value is even greater than simple cost avoidance. 
A government that owns a network 
can use inexpensive, off-the-shelf equipment to connect its facilities to one another at no cost for bandwidth (because the traffic is “on network”
 and not going out to the Internet). It can also deliver Internet connections to these facilities at a per-unit cost much lower than that of leased connections because it can aggregate the needs of all departments and purchase commodity bandwidth. This is particularly true for a jurisdiction that can develop a mutually beneficial partnership with a provider of wholesale bandwidth.

Considering the fact that capacity needs continue to grow, savings with a publicly owned next-generation network increase exponentially. Eliminating the need to lease now eliminates the need to lease more later.

Hovis also examines in detail the different ways municipal networks can provide revenue. She examines:

  • Dark or lit fiber to community anchor institutes (CAIs): We have documented hundreds of communities that lease dark fiber to CAIs and also to commercial customers. That list continues to grow.
  • Middle Mile Capacity: Providing infrastructure to private ISPs is more speculative, but encourages economic growth and provides connectivity to businesses and individuals who would not otherwise have it.
  • E-Rate Subsidies: As of September 2010, nonprofit and public networks are eligible for E-rate subsidies for providing broadband to schools and libraries. This potential source can contribute toward network self-sustainability.

The article also stresses one of the factors we find most compelling when considering investment in publicly owned networks - keeping local money in the local economy:

Circuits leased from a large national provider require the delivery of a big monthly check to a potentially far- away corporate entity, but monthly fees paid to a government-owned network stay in the community to be spent on other government services and to be multiplied when network employees go out to eat or spend money at other local businesses.

The concept of planning, financing, and building a municipal network is daunting to many communities; it should be a unique local decision. Few people have experience like Hovis, who does an excellent job of laying out critical considerations.