In Iowa, we know the municipal model works because we have 20 municipalities providing services at rates far below the incumbents'.
From the intro:
Clark McLeod, the founder and former chairman and CEO of Iowa-based CLEC McLeod USA, announced his latest project: OpportunityIowa, a grass-roots non-profit aimed at educating Iowans on fiber to the premises (FTTP) and convincing them to create municipal communication utilities — if for no other reason than just to keep their options open.
This is a good short article looking at an initiative that unfortunately did not go very far in Iowa. McLeod explained some of the thoughts behind it:
The larger service providers in Iowa have categorically stated they are not putting in FTTP, and there's no need for it. We want both private industry and municipal options open. But quite frankly, unless private industry steps up to FTTP right now, it's up to municipalities to drive that issue in the state. In Iowa, we know the municipal model works because we have 20 municipalities providing services at rates far below the incumbents'. We at OpportunityIowa have said a network that's open to multiple carriers is the right model. However, all we want citizens to do today is vote on a municipal communications utility. Once that group is put in place, that commission will look at the alternatives.
This article details the philosophy, approach, and opposition to an effort to allow many communities in Iowa to build their own open access telecommunications infrastructure - full fiber networks. Many in Iowa feel particularly vulnerable to the new economy because their low density puts them low on the priority list for investments by absentee-owned companies:
There is much talk in Iowa today about the need to attract and retain young people. Each year thousands of college graduates leave the Hawkeye State. Today in Iowa, there are more people over the age of 74 than under the age of five. No state grew at a slower pace than Iowa during the last century. Reversing these trends is going to take bold leadership and fresh ideas. OpportunityIowa was created to educate citizens about the vital role 21st Century communications infrastructure could play in doing just that.
Daley argued that without local self-reliance, many towns in Iowa would not benefit in the digital economy because they would not have access to fast and affordable networks.
The current cable and telephone companies serving Iowa have no incentive to replace their copper lines. They have to and they don't want to. They don't have to because they know consumers have no choice but to use their copper wires and they don't want to [encourage open access] because it may bring competition where they currently have none. In fact, the incumbent phone and cable companies have expressed their opposition to upgrading existing infrastructure in order to make Iowa a leader in broadband capabilities.
The article ends with lists of both communities organizing referendums for Nov, 2005, as well as communities that already have telecommunications utilities. Ultimately, many communities authorized the telecommunications utilities but most of those have not followed up by building the envisioned networks.
This article highlights three publicly owned networks that are expanding or building in the midst of a difficult economy - the Dumont Telephone Company in Iowa (a cooperative); Auburn, Indiana; and Greenlight in Wilson, North Carolina.
Dumont is facing the most difficult path:
Deploying rural and small-town fiber is always tough. Doing it without much hope of funding from outside is even tougher. But visionaries in these communities took the long view, planning to stretch out their builds over as much as seven years – longer if they have to. One community – Dumont, Iowa – is profiting from a world-class GPON build with fewer than two households passed per mile and precisely zero businesses to help foot the bill.
Auburn began building a municipal fiber network to keep some local employers in town - called Auburn Essential Services. As happens all over the United States, small towns lose businesses because the private sector is not able to provide the necessary networks. Built at first just to connect some local sites, the city later began to expand it:
In mid-2006 the city adopted a phased rollout plan for FTTP, where each phase would generate revenues that could be used to fund the next phase. The first phase, which includes the neighborhoods where most businesses are located, rolled out between April and December of this year.
The city’s marketing plan includes mailers, door hangers, advertising and even site visits to businesses. Existing technology was leveraged for back-office operations, and customers were given the option of receiving consolidated utility bills or separate bills for electricity and telecommunications.
Wilson, North Carolina, was also dealing with poor local networks that hampered economic development. Time Warner not only refused to build the necessary networks, it then refused to use a network the city offered to let them ride, and finally tried to prevent them by passing what was often called the "Incumbent Protection Act" in the state legislature. Fortunately, Time Warner was not able to prevent local competition and Wilson's network is currently being built. They used a rather unique financing plan:
Rather than issue general obligation bonds, Wilson obtained $31 million in private funding...
Doris Kelley takes a look at one of the early citywide publicly owned broadband systems - Cybernet in Cedar Falls, Iowa. Cybernet is run by CFU and is an HFC (cable) network that also offers some fiber-optic connections for businesses. In this paper, Kelley takes a look at some of the benefits the network has brought to the community.
From the start of the paper:
Cedar Falls Utilities, the largest municipally owned four-service utility in Iowa, provides electric, natural gas, water and communications services to a community of over 36,000 people. The citizens of Cedar Falls have been and continue to be the driving force behind Cedar Falls Utilities. Because of citizen demand and involvement, what once began as an unreliable water supply from “Big Springs,” a small light plant built with discarded bricks and an outdated manufactured gas system, has grown into an organization that is recognized nation-wide in the utility industry for outstanding performance management and some of the most favorable utility rates in the country.
Cedar Falls Utilities (CFU) is a strong supporter of economic development. Through the years, the Cedar Falls community has directly benefited by the operation of its municipally owned utilities through direct customer rate savings, free or special customer service programs and fund transfers to the City’s general fund.
CFU has made great strides to further its commitment to economic development. In 1994, a new horizon was encouraged through visionary thinking. Considerable strategic planning and analysis preceded the decision to design, construct and operate a Broadband Fiber Optic Communications System. The Cedar Falls Board of Trustees spent approximately 24 months studying the technical and financial feasibility of constructing and operating such a network. Finally, on October 24, 1994, the Cedar Falls City Council adopted ordinance No. 2072 forming the country’s second Municipal Communications Utility and transferring authority to the Cedar Falls Utilities Board of Trustees.
Jim Baller and Casey Lide are two of the foremost experts on municipal broadband systems in the United States. This report offers a clear and rational defense of publicly owned broadband systems. The discussion takes on philosophical, economic, and pragmatic arguments and comes to the conclusion that communities should not be prevented from building their own networks.
From the Intro:
The Tennessee Broadband Coalition has asked the Baller Herbst Law Group to respond to the main criticisms that opponents of public Fiber-to-the-User (FTTU) initiatives have raised in Tennessee and elsewhere. The Coalition would like to know whether any of these criticisms is valid, and, if so, what lessons the Coalition can learn from them to avoid or mitigate similar problems in Tennessee.
Over the last decade, Baller Herbst has been involved in most of the leading public communications projects in the United States. In almost all of these projects, the incumbent telephone and cable companies have rejected or ignored the locality’s invitation to join in cooperative efforts that would benefit all concerned and have instead mounted massive media and lobbying campaigns in opposition to the proposed public network. Often, the incumbents have funded support from industry “experts” and artificial “grassroots” groups (which have come to be known as “Astroturf”).
In their campaigns, the incumbents and their allies have typically included emotional appeals to private-enterprise ideology; flawed statistics; complaints about supposedly unfair advantages that municipalities have over the private sector; attacks on the motives and competency of public officials; and false or incomplete, misleading and irrelevant examples. In many cases, these arguments have mirrored the unsuccessful arguments that the major electric power companies and their allies made against municipal ownership a century ago, when electric power was the must-have technology of the day, and thousands of unserved or underserved communities established their own electric utilities to avoid being left behind in obtaining the benefits of electrification.
From the Executive Summary (stats from 2005): The attention of policymakers in both parties is now focused on the question of how to promote competitive broadband markets that will deliver high-speed Internet access to all Americans at affordable rates. It is a difficult problem. Present estimates are that around 30% of US households subscribe to DSL or cable modem service. This compares to over 70% in countries like South Korea. Virtually every rural state remains underserved and uncompetitive. In urban areas, many families are priced out of the market. The telecom and cable kings of the broadband industry have failed to bridge the digital divide and opted to serve the most lucrative markets at the expense of universal, affordable access. As a result, local governments and community groups across the country have started building their own broadband networks, sometimes in a purely public service and more often through public-private partnerships. The incumbents have responded with an aggressive lobbying and misinformation campaign. Advocates of cable and DSL providers have been activated in several state capitols to push new laws prohibiting or severely restricting municipalities from serving their communities. Earlier this year, Verizon circulated a “fact sheet” to lawmakers, journalists and opinion leaders proclaiming the so-called “failures” of public broadband. Many of the statistics come from a widely discredited study of municipal cable TV networks published in 1998. This paper debunks these lies case by case, juxtaposing information direct from the city networks with quotations from the telco propaganda. The results are unequivocal and damning.