Tag: "competition"

Posted April 9, 2012 by christopher

We are thrilled to finally unveil our latest white paper: Broadband At the Speed of Light: How Three Communities Built Next-Generation Networks. This report was a joint effort of the Institute for Local Self-Reliance and the Benton Foundation.

We have chronicled how Bristol's BVU Authority, Chattanooga's EPB, and Lafayette's LUS built some of the most impressive broadband networks in the nation. The paper presents three case studies and then draws lessons from their common experiences to offer advice to other communities.

Here is the press release:

The fastest networks in the nation are built by local governments, a new report by the Institute for Local Self-Reliance and Benton Foundation reveals

Chattanooga, Tennessee, is well known for being the first community with citywide access to a “gig,” or the fastest residential connections to the Internet available nationally. Less known are Bristol, Virginia, and Lafayette, Louisiana – both of which now also offer a gigabit throughout the community.

A new report just released by the Institute for Local Self-Reliance (ILSR) and the Benton Foundation explains how these communities have built some of the best broadband networks in the nation. Broadband At the Speed of Light: How Three Communities Built Next-Generation Networks is available here.

“It may surprise people that these cities in Virginia, Tennessee, and Louisiana have faster and lower cost access to the Internet than anyone in San Francisco, Seattle, or any other major city,” says Christopher Mitchell, Director of ILSR’s Telecommunications as Commons Initiative. “These publicly owned networks have each created hundreds of jobs and saved millions of dollars.”

“Communities need 21st century telecommunications infrastructure to compete in the global economy,” said Charles Benton, Chairman & CEO of the Benton Foundation. “Hopefully, this report will resonate with local government officials across the country.”

Mitchell is a national expert on community broadband networks and was recently named a “Top 25 Doer, Dreamer, and Driver” by Government Technology. He also regularly authors articles at MuniNetworks.org.

The new report offers in-depth case studies of BVU Authority’s OptiNet in Bristol, Virginia; EPB Fiber in Chattanooga, Tennessee; and LUS Fiber in Lafayette, Louisiana. Each network was...

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Posted April 5, 2012 by christopher

Siloam Springs, sporting 15,000 people in the northwestern corner of Arkansas, could be the next community to build its own community fiber network. But first they have to pass a referendum in May in the face of stiff opposition from Cox Cable, which would prefer not to face real competition.

For over 100 years, the city has provided its own electricity via its electrical department. Now, it wants to join the more than 150 other communities that have done so. After last year's changes to Arkansas law, Siloam Springs has the authority to move forward if it so chooses.

Pamela Hill at the City Wire has covered the situation with a series of stories, starting with an explanation of why they are moving forward:

David Cameron, city administrator, said the proposal is not so much about dissatisfaction with current providers as it is about finding new revenue for the city. Cameron said revenue from electric services has been a key source of funding for various projects and necessities for the city. That “enterprise” fund is getting smaller, Cameron said, and an alternative funding source is needed.

“We have done a good job managing accounts, building a reserve,” Cameron said. “We want to keep building on the programs we have. It takes money and funds to do that.”

City officials discussed the issue for the last 18 months and decided to put it to a referendum. Voters will decide the issue May 22.

That is a fairly unique reason. Most communities want to build these networks to encourage economic development and other indirect benefits to the community. Given the challenge of building and operating networks, few set a primary goal of boosting city revenue.

Map of Siloam Springs

If approved by voters, the city plans to spend $8.3 million to install 100 miles of fiber optic cable directly to homes and businesses. The city should be able to repay the debt in 12 years, if things go according to a feasibility study presented to the city’s board of directors in January. Cameron said projections show the system could begin making a profit...

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Posted March 11, 2012 by christopher

UTOPIA, the pioneering and oft-maligned open access FTTH network in Utah, has announced the DISH network as their latest service provider.

“We are partnering with DISH Network to provide more entertainment options to consumers through different mediums. DISH is at the forefront of recognizing that more and more people are changing the way they watch TV and that fewer of them are viewing their favorite programs on schedules determined by the content providers,” said Todd Marriott, Executive Director of UTOPIA. “DISH Network is one of the best content delivery companies out there, and we’re grateful to be doing business with them to offer content people want at a reasonable price.”

Securing a major ISP to operate on the UTOPIA network is a big win in part because of the marketing potential. While many UTOPIA customers are happy with their ISP, the ISPs are limited in their capacity to advertise. As a national company, DISH may be well poised to bring a many new subscribers to the network.

DISH also seems to be trying to get beyond just delivering TV channels. The discussion in the press release about sling-technologies suggest that DISH is concerned that its subscribers need better connectivity to the Internet to take full advantage of the technology DISH is offering them.

Jesse has given this some thought at Free UTOPIA:

First, let’s consider that DISH already has a lot of customers in UTOPIA areas. They could immediately start marketing both data and voice service to those subscribers. Given that they can cross-subsidize using revenues from other markets, using the MStar tactic of aggressive marketing would be sustainable. They also have installation and customer service staff in place to handle that influx.

That cross-subsidy can also help them pick up new customers on a triple-play package. One of the main barriers to signing up new customers has been the acquisition cost. DISH could potentially opt to subsidize or entirely eat the install cost as a way of speeding up deployment, something they have the cash to do. They can also double up their marketing to hit up potential new customers while marketing to existing ones.

Given's UTOPIA's history of trouble, having a...

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Posted March 8, 2012 by christopher

When Monticello, Minnesota, decided to build its community fiber network -- Fibernet Monticello -- it expected the incumbents to lower their prices and fight to keep subscribers. But Monticello had no idea the lengths to which they would go.

The telephone incumbent, TDS, delayed the project for a year with a frivolous lawsuit and then built its own fiber-optic network while dramatically lowering its prices. We have yet to find another community in North America with two citywide FTTH networks going head to head.

Because of the city's network, Monticello's residents and businesses have access to better connections than the biggest cities in Minnesota can get.

Now, Charter has weighed in by cutting its rates to what must be below cost to gain subscribers. It reminded us of a shoot-out, so we created this infographic to explore what is at stake.

The Good, the Bad, and the Ugly in Minnesota

Download a higher resolution PDF here.

Charter has taken a package for which it charges $145/month in Rochester, Duluth, Lakeville, and nearby Buffalo (MN) and is offering it for $60/month - price guaranteed for 2 years. A Monticello resident supplied us with this flyer, which this person had received multiple times at their home over the course of a month. (See below for the full flyer).

Charter's rate sheet

This is either predatory pricing or the cable industry is out of control with its rate increases. If that package costs Charter more than $60/month to supply, then it is engaging in predatory pricing to drive competitors out of the market. Consider that Charter may be taking a loss of $20/month ($240/year) from each household that takes this offer. They can do that by cross-subsidizing from nearby markets where they face...

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Posted February 21, 2012 by christopher

The Florida Independent has taken a look at a pro-massive cable monopoly group in Florida and compared their opinions to ours regarding broadband policy.

The Coalition for the New Economy — which works to ensure “that investments in broadband networks are used efficiently and effectively”— wrote Tuesday that “funding for government-owned broadband networks is very often duplicative,” and “diverts local funds from public safety and education.

...

Christopher Mitchell of Community Broadband Networks tells the Independent that official U.S. government policy believes “we can have proper competition if every competitor builds their own network, and that is not at all supported by reality.”

This group is emphatically supporting less competition because the private sector does not want to overbuild other private networks. If the public is not allowed to build next-generation networks where private companies already operate last-generation networks, communities will have neither modern connections nor real choices. The cable and DSL companies are arguing that no one should be allowed to build public interstates where private dirt roads exist.

We live in a democracy. We are supposed to be free to choose the best policies in promoting infrastructure. We can choose a future where we are more dependent on a few absentee massive corporations or one in which we have more control over our future. We can pursue policies that would result in real choices among broadband service providers or we can continue the status quo, where choices dwindle.

Below, I have included an excellent debate from last year in which the above points are fleshed out over 2 hours.

Posted February 19, 2012 by christopher

We are running a guest commentary today. Eric Null is a third-year law student at Cardozo Law School in New York City. He is passionate about corporate and intellectual property law, as well as technology and telecommunications policy. Follow him @ericnull or check out his papers. While researching a paper about municipal broadband networks, I was struck by the tremendous benefits that municipal networks can provide. It can be the first high-speed Internet link for an area without broadband, or it can provide some much-needed competition in areas that currently have access to broadband, but for some reason that existing access is unsatisfactory (e.g. price, service). Municipalities, in theory, can run the network for the benefit of the public rather than with a vicious profit maximization motive. Indeed, municipal networks bring many benefits. But first, a little history. In the United States, cable providers have set up regional monopolies for themselves, and “competitors” such as DSL and satellite are characterized by slower connection speeds and it is arguable that they are actual substitutes to cable access. Certainly within the cable industry, any “competitive” cable company attempting to compete with incumbents is met with high costs of building new infrastructure and lack of customer base. Municipalities can pick up where smaller, private entities cannot succeed. Municipalities have had a long history of investing in critical infrastructure, and they have the mentality for long-term planning that private companies simply cannot enjoy. A large company like Verizon likely has to justify any expansion of its network to its investors and ensure them that the venture will return a profit relatively quickly. Not so with municipalities; a city network allows its citizens to benefit indirectly (and directly) over the long-term. Thus, city governments can be a formidable competitor in the telecom and cable industries. Some states, regrettably, have banned or restricted the practice. In Nixon v. Missouri Municipal League, the Supreme Court interpreted so-called vague language in the Telecom Act of 1996...

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Posted February 16, 2012 by christopher

The Heartland Institute is one of those organizations that will say anything its massive corporate funders want it to. It is embroiled in a scandal from the release of internal documents due to its work challenging the science behind climate change.

In the telecom space, Heartland's employees have encouraged laws to take decision-making authority away from communities in order to benefit the massive cable and DSL companies (like Heartland-funder AT&T).

They advocate for efforts like Georgia's SB 313 and South Carolina's H3508, saying:

  1. Muni networks are doomed to failure because of the general incompetence of government
  2. Muni networks will drive private sector providers out of the market because governments are too all powerful and have too many advantages in competition

This is why we see bills that are supposed to "level the playing field" pushed by big companies like Time Warner Cable in North Carolina last year.

If you take a gander at Heartland's telecom work, you have to wonder why the playing field needs to be leveled if they believe what they have written:

A municipal government cannot possibly hope to compete with well-capitalized broadband providers in a highly competitive market.

For those unfamiliar with Heartland, they don't use the same definitions for common words like "competitive" as the rest of us do. In Heartland's world, "competitive" means a market in which one of our funders operates regardless of how much competition exists in it.

So why do we need new legislation to make it even harder for communities to build the networks that the cable and DSL companies won't build?

Posted February 16, 2012 by christopher

Susan Crawford's op-ed in Bloomberg makes a tremendous case for publicly owned broadband networks.

She notes the importance of broadband and the failure of big cable and DSL companies to meet the growing needs of communities, just as the electrical trusts were insufficient to electrify much of America.

I'm a bit biased because she cites our work:

Today, the Institute for Local Self-Reliance, which advocates for community broadband initiatives, is tracking more than 60 municipal governments that have built or are building successful fiber networks, just as they created electric systems during the 20th century. In Chattanooga, Tennessee, for example, the city’s publicly owned electric company provides fast, affordable and reliable fiber Internet access. Some businesses based in Knoxville -- 100 miles to the northeast -- are adding jobs in Chattanooga, where connectivity can cost an eighth as much.

Though I encourage readers to read the full column, I love the conclusion:

Franklin D Roosevelt

Right now, state legislatures -- where the incumbents wield great power -- are keeping towns and cities in the U.S. from making their own choices about their communications networks. Meanwhile, municipalities, cooperatives and small independent companies are practically the only entities building globally competitive networks these days. Both AT&T and Verizon have ceased the expansion of next-generation fiber installations across the U.S., and the cable companies’ services greatly favor downloads over uploads.

Congress needs to intervene. One way it could help is by preempting state laws that erect barriers to the ability of local jurisdictions to provide communications services to their citizens.

Running for president in 1932, Franklin D. Roosevelt emphasized the right of communities to provide their own electricity. “I might call the right of the people to own and operate their own utility a birch rod in the cupboard,” he said, “to be taken out and used only when the child gets beyond the point where more scolding does any good.” It’s time to take out that birch rod.

Posted February 14, 2012 by christopher

Many complain about gridlock in Washington, DC, but I sometimes subscribe to the cynical counter-reaction that gridlock is great. It is when the Democrats and Republicans agree that Americans should beware.

Though this may or may not be true about politics, it is certainly true when applied to two of the most hated industries in America: cable television companies and DSL companies like AT&T. When they come to agreement, you can bet that prices are going up for the rest of us.

In our coverage of AT&T's bid to limit broadband competition in South Carolina by revoking local authority to build networks for economic development, we have thus far ignored the position of the cable companies.

We took a tour through the newsletters of the South Carolina Cable Television Association over the course of 2011, which is when AT&T introduced its H.3508 bill.

Unsurprisingly, the cable companies are thrilled at the prospect of limiting competition in communities by cutting off the ability of a community to build a network when the private sector is failing to meet their needs. From the 1st Quarter newsletter [pdf]:

The SCCTA has been actively following the AT&T-backed legislation that would amend the Government-Owned Telecommunications Service Providers Act. House Bill 3508 would impose the same requirements on government-owned broadband operations that are currently imposed on telecommunications operations.

Of course, H.3508 goes far beyond applying the "same requirements." It enacts a host of requirements that only apply to public providers, which are already disadvantaged by being much smaller than companies like Time Warner Cable and AT&T. We have long ago debunked the myth of public sector advantages over the private sector.

The second quarter newsletter [pdf] identifies this bill as the highest priority of the cable association:

H3508, the AT&T backed legislation, has been our dominate piece of legislation in 2011.

Even after the bill was shelved...

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Posted February 2, 2012 by christopher

The USA Today occasionally covered the Lafayette muni fiber network fight as Cox and Bellsouth used every dirty trick conceivable against the community to shut it down. Reporter Rick Jervis looks back in now that the network is available to everyone in town.

The battle over broadband in Lafayette is part of a growing number of clashes across the USA that pit municipalities against telecom firms for the right to deliver Web access to homes and businesses. More than 150 local governments across the country have built or are planning to build cyber networks, says Christopher Mitchell of the Washington-based Institute for Local Self-Reliance, a non-profit group that advocates community development and local access to technology. Mitchell says those efforts often draw opposition in the form of misinformation campaigns, lawsuits from private providers or unfavorable state laws resulting from telecom lobbying. Nineteen states either ban cities and counties from getting into the broadband business — or make it difficult.

Minor quibble: the Institute for Local Self-Reliance (and particularly my work) is not Washington-based.

Like the toy in Crackerjack boxes, we cannot have a story about community networks without at least one blatant lie from some cable company employee. No disappointments here:

"Our initial objection was, and remains, that it is an unfair advantage for your competitor to also be your regulator," says Todd Smith, a Cox spokesman. "Many states prohibit government from competing with the private sector."

I challenge Todd Smith to name one way in which LUS Fiber regulates Cox. When the local government makes rules that impact either Cox or LUS Fiber, such rules have to be non-disciminatory or they violate state and federal laws. If incumbents think the community is violating any laws, we know that they know how to hire lawyers and file lawsuits. They've done it often enough.

The story details some of the benefits to the community since LUS Fiber opened shop -- including businesses moving to Lafayette to create new jobs:

LUS Logo

Scott Eric Olivier moved his tech startup firm, Skyscraper Holding...

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