Tag: "subsidies"

Posted February 20, 2017 by lgonzalez

In January, Governor Bill Haslam announced that he and Senator Mark Norris would introduce legislation to provide grant funding and tax credits to private companies in order to expand rural connectivity in Tennessee. In a recent Knoxville News Sentinel, Christopher took another look at more subsidies to large private providers and how that strategy has worked out so far.

We've reprinted the op-ed here:

Christopher Mitchell: State needs better broadband, not subsidies

If you were tasked with improving the internet access across Tennessee, a good first start would be to examine what is working and what’s not. But when the General Assembly debates broadband, it frequently focuses on what AT&T and Comcast want rather than what is working.

Broadband expansion has turned into a perennial fight between Tennessee’s municipal broadband networks and advocates of better connectivity on one side and AT&T and Comcast on the other. On one side is a taxpayer-subsidized model, while the other depends solely on the revenues of those who choose to subscribe. But which is which?

AT&T has received billions of taxpayer dollars to build its networks, whereas Chattanooga, Tullahoma and Morristown, for example, financed their fiber-optic networks by selling revenue bonds to private investors and repaying them with revenues from their services. The big telephone companies are massively subsidized, whereas municipal networks have generally not used taxpayer dollars.

It is true that after it began building, Chattanooga received a Department of Energy one-time stimulus grant for $111 million, but that was actually less than AT&T is getting from just one federal program in Tennessee alone – over $125 million from the Connect America Fund. And most of the money to Chattanooga went into devices for its smart grid that have since led to massive job gains.

These community networks offer modern connectivity. Chattanooga offers 10,000 Mbps to anyone in its territory. AT&T is getting enormous checks from Uncle Sam to deliver 10 Mbps. Comcast will soon offer 1,000 Mbps, but only for downloads. If you are a small business trying to upload lots of data, Comcast won’t get you there.

According to a 2016 Consumer Reports study, Comcast and AT&T were among the most hated companies across the board. Chattanooga’s Electric...

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Posted February 14, 2017 by christopher

The most rural area of Missouri is getting a Fiber-to-the-Home network from the United Electric Cooperative, which has created United Fiber and is expanding across its footprint and to adjacent areas that want better Internet access. Chief Development Officer Darren Farnan joins us to explain why his co-op has taken these steps.

We discuss how they are rolling it out - focusing on areas that need the service while respecting the telephone cooperatives that are within their electric footprint. The project has benefited from a broadband stimulus award and also incorporates fixed wireless technology in some areas.

We discuss some of the economics behind the project and are sure to clarify that though the utility has needed some capital subisides to build the network, it does not need any operating subsidies to continue - it runs under its own revenue. And we talk about the demand for better, faster connections - it is much higher than most realize.

Read the transcript of the show 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 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 Admiral Bob for the music. The song is Turbo Tornado (c) copyright 2016 Licensed under a Creative Commons Attribution (3.0) license. Ft: Blue Wave Theory.

Posted January 4, 2017 by KateSvitavsky

Internet access for low-income households is becoming more affordable, thanks to an FCC modernization order that brings the Lifeline program into the 21st Century. 

Next Century Cities recently offered a webinar for people who want to learn more about changes to the Lifeline program; our own Christopher Mitchell moderated the event. Jaymie Gustafson, Director of Stakeholder Engagement for the Lifeline, and attorney Olivia Wein from the National Consumer Law Center shared their knowledge about the order, discussed how local governments can utilize the program in public housing, and suggested ways local governments can help make the program a success.

The program, which initially provided a $9.25 subsidy to eliminate or lower the cost of telephone services to low-income households, now allows recipients to use the funds to purchase broadband services. Gustafson noted one of the driving factors behind the modernization order:

“We know it’s so important in terms of helping children do their homework, in terms of people being able to search for and keep their jobs, in terms of accessing services, just in terms of interacting with society around you. Right now, broadband is not a luxury. It’s a necessity.”

About The Program

The Universal Services Administrative Company (USAC) governs the Lifeline program, which originated in 1985 and receives funding from the Universal Services Fund. The fund, established in 1935, supports other programs that invest in telecommunications infrastructure in addition to low-income access. Instead of receiving a voucher to purchase services from a carrier or an Internet Service Provider (ISP), the provider receives the subsidy directly from USAC; after the discount is applied to Lifeline participants' bill, the participant pays the remainder to the provider.

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Participants are eligible for the Lifeline program if they earn less than 135 percent of the federal poverty line, receive SNAP benefits,...

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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 March 25, 2014 by christopher

Lisa Gonzalez and I, Christopher Mitchell, are back in studio for a short conversation about the implications of a municipal network or a coop receiving subsidies from government to engage in overbuilding, where it builds a fiber network in an area already served by slow DSL and cable networks. This has become an important issue as Minnesota considers a fund that would encourage networks in areas currently unserved and possibly underserved. We discuss the economics, fairness, and practial realities of both allowing "overbuilding" and disallowing it as Minnesota features two similar networks that have come to different conclusions, to the advantage and disadvantage of different local stakeholders. Read the transcript from this episode 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 13 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 Valley Lodge for the music, licensed using Creative Commons. The song is "Sweet Elizabeth."

Posted October 8, 2013 by christopher

In a reminder of just how poor telecommunications can be in this country, Franklin County in rural northwest Alabama has formed a Task Force to investigate how it can get something better than dialup.

“The Internet has become an important as having electricity and water,” said Cole, an extension agent in Franklin County. “For our businesses to attract customers and to attract other businesses to come in here, we have to have broadband Internet access.”

But it turns out that they don't even have access to modern telephones in some instances:

Some Franklin County residents have access to dial-up Internet, which is slower than broadband high-speed Internet service. However, some Franklin residents still have a “party line” for phone service.

Who has refused to invest in these exchanges? AT&T is the major provider in the area (followed by CenturyLink) and it came to a Task Force meeting to talk about what "needs to be done to bring high-speed Internet to the county."

Unfortunately the report doesn't note what the ideas were but we would be surprised to learn it doesn't involve some form of federal or local subsidy to get AT&T to invest in this area. There is not much profit to be made, so AT&T is more likely to push these people into expensive 4G LTE wireless solutions than anything that would compete with modern connections.

This is not the first such meeting - as noted by a previous article:

Commission Chairman Barry Moore said meetings were previously held to discuss the lack of high-speed Internet, but nothing materialized.

When it comes to local governments solving their problems by investing in themselves, AT&T falls over itself to stop them - even if it means an area will remain unserved.

We read of a conservative Republican holding out hope for federal grants to subsidize such a project.

In addition, Kreg Kennedy, a district field representative for U.S. Rep Robert Aderholt, R-Haleyville, discussed the possibility of federal grants to help get the project underway.

It is a fascinating situation when AT&T angling for taxpayer money from the federal...

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Posted April 2, 2013 by lgonzalez

Municipal broadband networks have been gaining traction across the country. It's easy to see why: In many rural and low-income communities, privately offered broadband services are nonexistent. In its 2012 Broadband Progress Report the Federal Communications Commission counted nearly 20 million Americans (the vast majority living in rural areas) beyond the reach of broadband.

The Free Press' Timothy Karr's words are supported by the growing number of pins on our Community Network Map. We connect with places nearly every day where municipal networks fill the cavernous gaps left by the massive corporations. Large cable and telecom providers do not hide their aversion to servicing rural areas, yet year after year their lobbying dollars persuade state politicians to introduce bills to stop the development of municipal networks. Karr reviewed recent efforts to use state laws to stifle community owned networks in a Huffington Post article.

As readers will recall, this year's front lines were in Atlanta, where HB 282 failed. We hope that loss may indicate a turning point in advancing municipal network barriers because the bill lost on a 94-70 vote with bipartisan opposition. If it had succeeded, Georgia would have been number 20 on a list of states that, thanks to ALEC and big corporate sponsors like AT&T, Comcast, Verizon, and Time Warner Cable, have decided to leave their citizenry begging for the private market to come their way.

Time and again, the supporting argument goes like this:

"A vote 'yes' for this bill means that you support free markets and free enterprise," [Rep Hamilton, the Chief Author of HB 282] said [on the House Floor].

A 'no' vote means that you want more federal dollars to prop up cities, Hamilton said.

But Karr points out that some policy makers are starting to question that argument, with good reason. From his article:

"They talk about [the companies] as if they are totally free market and free enterprise, but doesn't AT&T get some tax breaks?" [Rep. Debbie Buckner...

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Posted August 22, 2011 by christopher

Lafayette Doing OK, Doubles Capacity for Promotion

John at Lafayette Pro Fiber recently updated us all on LUS Fiber's financials. According to John, LUS Fiber is doing OK, not great, in its FTTH offering (probably the best deal in the nation for fast, affordable, and reliable connections). In reading deeper, it is clear that the impact of the community network on the public is GREAT, not just ok.

From John's writeup:

LUS estimates that the citizens of the community have saved 5.7 million dollars—in part direct saving from LUS' cheaper phone, video, and internet services and in part as a consequence of Cox lowering its prices and giving out special rates. Those special rates were discussed in the meeting with Huval pointing out that Cox had petitioned for and received permission to treat Lafayette as a "competitive" area. That meant that Cox could offer special deals to Lafayette users and, as we all know, has offered cuts to anyone who tries to leave. Those "deals." as Huval pointed out to Patin don't include the rural areas of the parish where Cox has no competition.

But it doesn't end there. LUS Fiber, due to anti-competitive laws pushed through the state's legislature to handicap public providers, is actually subsidizing the City -- providing more benefits to everyone, even those who do not subscribe to the network.

Again it all goes back to the (un)Fair Competion Act. One of the things in that act a concession that LUS Fiber would be able to borrow from LUS' other utilities just like any other corporation could set up internal borrowing arrangements. This is not a subsidy, it's a loan—with real interest. One of the efforts to raise an issue by Messrs Patin and Theriot centered around "imputed" taxes. Those are extra costs that Cox and ATT got the state to require that LUS include in order to force LUS to raise their price to customers (you!) above the actual cost. (Yes, really. See...

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Posted May 13, 2009 by christopher

Critics also charge that municipalities only succeed due to tax exemptions and subsidies -- but Florida municipalities return as much, if not more, funds to public treasuries that private telecom firms. And as for subsidies -- well, incumbents themselves have received direct subsidies of nearly $390 million in the last five years to provide service in Florida.

Posted May 7, 2009 by christopher

I’m very familiar with many government owned telecom operations throughout the world, over many years, and across many different forms of government, and I can tell you that governments generally do not subsidize publicly owned telecommunications. They milk telecommunications - these systems generate a lot of revenue.

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