Tag: "tennessee"

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 September 30, 2009 by christopher

On the Daily Yonder - offering coverage of rural issues - Craig Settles offers advice to community networks on the need to attract institution and business customers because networks rarely generate enough revenue to make debt payments by focusing solely on residential subscribers.

When communities compare the costs of different technologies, they often get too caught up in the upfront costs and ignore the ongoing costs (operating costs, or opex). He offers an example of a modest wireless network:

It’s important to understand that while it costs a lot of money to create a broadband network, over a five-to-ten-year period, it costs even more to operate that network than to build it. Say it costs $1 million to build a wireless network. During the municipal wireless heyday, it was estimated to cost 20% of buildout expense to operate the network annually – to pay for customer service, maintenance, upgrades, etc. That’s $200,000 a year.

This is a great intro article for those who may not be used to thinking about the economics or business plans networks need.

For the rest of us, it is a strong reminder of how many networks start (and a good path for those who want to create a network):

Santa Monica, California, had a legacy PBX phone system and slow connection circuits from incumbents. The city pooled money it was already paying for voice and data services, using this capital to build a fiber network and implement new communication technology.

City CIO Jory Wolf states, “By switching to fiber we realized a $500,000 savings in data circuits and $250,000 savings in voice circuits, all of which stayed in our fund. Ongoing savings enabled us to provide our police with video streaming in their vehicles. We have excess bandwidth, so we provide (a) large number of sites with free wireless access.” Wolf said that the city is also selling companies fiber lines that haven't yet been turned on. “Our network budget is self-sustaining,” he said, “and I have $2.5 million in capital.”

I remember Tim Nulty saying that Burlington Telecom started the same way. They figured out how much they were paying each month for telecom as a city. They used that number to compute how much they could spend...

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Posted September 28, 2009 by christopher

On Tuesday, September 15, EPB, the public power utility serving Chattanooga and nearby communities in Tennessee, rolled out fully fiber-powered triple-play services to 17,000, a number expected to grow by July 2010, when services will be available to some 100,000 people and businesses. It will take three years before all 160,000 potential subscribers are passed.

Chattanooga has had a relatively rough time creating the network due to the litigious nature of its incumbents, who have filed 4 lawsuits to stop the project only to have each of them dismissed by the courts. (This is a predictable outcome, many of these companies file frivolous lawsuits to intimidate communities with lost time and legal fees - leading to a no-lose situation for companies that invest more in lawyers than in the networks communities need in the modern economy.)

Prices and Options

All broadband speeds are symmetrical; prices by month

Option Price
15 Mbps $57.99
20 Mbps $69.99
50 Mbps $174.99
15 Mbps and basic phone $68.83
15 Mbps / basic phone / basic cable $92.97
15 Mbps/ phone & 120 min long distance / 77 Channels $117.24

Caveats: an extra $5.99 a month for HD Capability on the TV, but even the basic phone package comes with caller ID and 3-way calling

The Tennessee Cable and Telecommunications Association kicked off the lawsuits in 2007 and Comcast chimed in a year later. As has been done in other communities, the private companies alleged the power utility was cross-subsidizing its triple-play telecom offering with revenues from the electric side. Aside from this just being a poor business practice, the companies say such cross-subsidization would be unfair to them even as major carriers routinely cross-subsidize from community to community - overcharging in non-competitive markets to make up for keeping prices low in competitive markets.

Nonetheless, public power companies and other public agencies have learned to keep meticulous books to show they are not cross-subsidizing, something courts recognize each time their time is wasted by lawsuit-happy incumbent providers.

EPB has long offered some telecom...

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Posted September 4, 2009 by christopher

Johnson City, Tennessee, is considering the pros and cons of expanding the fiber network its public electrical utility is installing to connect substations in order to improve grid reliability. They may follow the example of many other Tennessee public utilities that have offered broadband services to residents, creating competition in a sector sorely needing it.

They will need to speed the process along if they are going to get any stimulus money - many communities have been considering these options for longer and are ready with plans.

When Johnson City first considered connecting the substations, providers opposed it, afraid they would ultimately offer broadband services to residents. These providers said they already had fiber and would be happy to connect the substations at a "fraction of what JCPB [Johnson City Power Board] is about to spend."

Undoubtedly, they were comparing the costs of building a public network against the costs of leasing services for one year. Johnson City was smart to rebuff them and pursue owning the fiber - companies like Charter and Comcast don't make a profit by offering fair prices on connectivity (in fact, Charter is still bankrupt despite overcharging for its slow broadband speeds). Communities that own their fiber (regardless of whether they offer retail services to businesses and residents) find that they get better services at lower costs than when leasing connectivity.

These cable companies in Tennessee are brutal - they abuse the courts with frivolous lawsuits (that are frequently thrown out at the first opportunity) and invent data to suggest public ownership is a poor choice. Ultimately, Johnson City Power Board will have to choose what makes sense based on the numbers, not on fearmongering from companies that are just trying to protect high profits protected by a lack of competition.

Posted August 27, 2009 by christopher

Folks who are mostly interested in broadband are probably unfamiliar with video franchising laws. Many people still apparently believe that cable companies are able to get exclusive franchises from the city (granting them a monopoly on providing cable television). However, that is not true and has not been true for many years.

Most cable companies still have a de facto monopoly because it is extremely difficult to overbuild an existing cable company - the incumbent has most of the advantages and building a citywide network is extremely expensive. This is not a naturally competitive market; it is actually a natural monopoly.

However, most people want a choice in providers (something that goes beyond a single cable company and a satellite option or two depending on whether you rent/own and your geographic location. In talking with many local officials and the National Association of Telecommunications Officers and Advisers (NATOA), it seems that almost every local government wants more competition in its community too.

This is where telephone and cable company lobbyists have stepped in - more successfully at the state level than at the federal level. They have convinced legislators that the barrier to more competition is local authority over the franchise (the rules a company agrees to in return for the right to use the community's Right-of-Way in deploying their network). These rules include red-line prohibition (you cannot refuse to serve poor neighborhoods), an affordable "basic" tier of service, local public access channels, broadband connections at public buildings, etc.

Some states have listened to the lobbyists and enacted statewide franchising - where local communities are stripped of the authority to manage their Right-of-Way and companies can offer video services anywhere in the state by getting a state franchise from the state government. Every year, we gather more data that this practice has hurt communities, raised prices, and barely spurred any competition. Most of the competition it is credited with spurring came from Verizon's FiOS deployments, which would have occurred regardless of state-wide franchise enactment.

This touches directly on broadband because the statewide franchises often give greater power to companies like Verizon to cherry-pick who gets next generation broadband. Wealthier neighborhoods will increasingly get access to faster...

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Posted July 15, 2009 by christopher

A couple of short interesting stories this week:

  • The Chattanoogan.com published a "Declaration of Independence from Comcast", written by a "fi-oneer" or person who is testing the new publicly owned FTTH services.

    Unsurprisingly, there are some glitches this early in the process, but the fi-oneer seems pretty happy with it overall:

    The television is fantastic; we have a multitude of channels, both high def and non high def; local, 'cable,' sports, movies, etc. Contracts are still being completed with a couple of providers, so we are missing my favorite, HGTV. I have been told that it will be coming in less that two weeks.

    Although as with any new product there are occasional glitches, but we have only had a few, minor not major ones, at that. The picture might freeze for a few seconds, or pixilate for a few seconds. There are some things you need to learn about the remote control.

    Interestingly, early problems can actually help community networks. In Burlington, Vermont, early problems allowed the publicly owned network to demonstrate how good its customer service was compared to the incumbents and gained a better reputation.

  • More news out of Seattle - following up on our recent story noting Reclaim the Media's push for public broadband in Seattle, Seattle radio station KUOW's program "The Conversation" had some guests discussing the existing network in Tacoma and a potential network for Seattle. Follow that link to listen in, the relevant portion runs from 14 minutes to 21 minutes (a total of 7 minutes).

  • Karl Bode at DSL Reports slams a recent report by incumbent-flack group Discovery Institute that concludes government regulation of broadband is unnecessary. Bode's response is worth reading, here is an excerpt:

    All of this makes Swanson's whining about "groups that want heavier regulation" disingenuous, given men like Swanson just got done seeing more than a decade of sustained deregulation in the telecom sector thanks in large part to his own lobbying. The result was the United States setting new records for being thoroughly mediocre, given American consumers pay more money for less bandwidth than a significant...

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Posted June 30, 2009 by christopher

Pulaski, Tennessee, has used its public power utility, Pulaski Electric System, to build a fiber-to-the-home network. They started building the network in 2006 and offering services in 2007.

In this snapshot by Broadband Properties, the technical aspects of the network are explored.

Some economic development impact:

Local economic development leadership has begun marketing PES’ services to nearby Huntsville, Alabama, which is home to a large number of defense and space industries. Before PES built its network, the community had never attempted to approach the defense or aerospace companies because it had little to offer that met their special needs.

The FTTH network has allowed several existing industries to receive superior service at much lower prices. The system has become a focus of community pride and an example of the community’s willingness to invest in the future.

One key lesson learned has been that the long term needs of the community are not reflected in the current preferences of residents:

Although we built a state-of-the-art fiber network, we came to realize that most residential customers do not concern themselves with future applications. They are looking to replace or upgrade the services they have today. So even though we built a system capable of cutting-edge services, it often still comes down to which TV channels you offer and at what price. Customers are shoppers first.

They have also offered increasing educational opportunities:

PES established a partnership with the local college to operate our local access channel, 3PTV. This channel provides the students at Martin Methodist College with an opportunity to learn video production and technical editing, and it provides a valuable and exclusive channel offering for PES.

Also, we partnered with AT&T to provide a turnkey network that links all the schools in our county. PES provides the fiber connection, and AT&T manages the data and technical support. This allowed the local school district to use AT&T’s state contract pricing, yet be linked with PES’ fiber network.

Posted June 19, 2009 by christopher

Some shorter news items from this weeks' news:

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Posted June 11, 2009 by christopher

Chattanooga, Tennessee is predicting it will offer FTTH in its entire service area by next year. The public power company has used fiber-optics in the past to manage its electrical operations and has been planning to offer a full FTTH network for awhile.

"There are two primary components to building this system. One component is taking longer than we thought and the other is happening much faster than we anticipated", said Harold DePriest, President and CEO. "The end result is that services will be available to the entire cities of Chattanooga, East Ridge and Red Bank by summer of 2010."

DePriest says once in place, EPB's fiber optic network will be the largest of its kind in the country.

However, Chattanooga has suffered the same problem that has plagued other publicly owned broadband projects around the country: incumbent telco and cableco lawyers. Comcast has sued Chattanooga in multiple courts in an attempt to limit competition (see here, here, here, and here for a few examples). As with these cases across the country (from Monticello, MN to Bristol, VA, to Lafayette, LA), the incumbents have lost the cases but successfully slowed the build-out, which hurts the community while padding company profits for an extra couple of years.

The network will offer symmetrical speeds of 10-50Mbps while keeping costs lower than the standard prices in the market.

Posted June 9, 2009 by christopher

The Broadband Properties Muni Snapshot of Jackson Energy Authority, serving Jackson Tennessee, offers a fiber-to-the-home network. As is common to the snapshots, it is heavy on technical data.

After 4 years, they had an overall take rate of 39% as well as some businesses locating in the area due to the network. Residents have saved some $8 million in aggregate since the network began offering services.

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