Tag: "competition"

Posted June 8, 2012 by christopher

Monticello has been all over the muni broadband news lately, in the wake of a letter it sent to bondholders [pdf] alerting them that the City would no longer make up the difference between the revenues produced by the system and the debt payments. This came shortly after the company managing the network decided to step down.

Over the next year, the reserve fund will make up the difference while the City and bondholders come to some sort of an agreement.

The Star Tribune today published a good synopsis of the situation:

City administrator Jeff O'Neill said that the city has no intention of abandoning FiberNet's 1,700 customers, including about 130 businesses.

"This system isn't going anywhere," he said. "We're not going out of business."

Despite the problems, he said the city has one of the fastest Internet systems in the country that has driven down prices and improved services by providing competition.

The article also notes that prior to the City-owned network, the telephone company (TDS) provided very poor DSL service that was harming area businesses with slow and very unreliabile phone and broadband services. Without FiberNet Monticello, we don't know how many businesses would have been forced to relocate to be competitive in the digital economy.

We decided to dig a little deeper to get a sense of what Monticello has received for its investment and difficulty. We previously examined the prices charged by Charter cable in town and found that households taking that deal were saving $1000/year.

monticello-goodbadugly_0.jpg

We also noted that Charter was almost certainly engaging in predatory pricing. After talking with other networks, we would guess that Charter is losing between $30 and $50 (conservatively) per subscriber per...

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Posted June 6, 2012 by lgonzalez

If you live in Boston, Baltimore, Albany, Syracuse, or Buffalo, you won't be getting FiOS from Verizon. Absent any public investment, you will likely be stuck with DSL and cable... like 80% of the rest of us.

Not long after Verizon announced it would cease expanding FiOS, we learned that Verizon was coming to an arrangement with the cable companies that would essentially divide the broadband market. Verizon won't challenge cable companies with FiOS and the cable companies won't challenge Verizon's "Rule the Air" wireless domain.

For a while now, the FCC has reviewed a potential deal for a Verizon purchase of Comcast's wireless spectrum. The possible deal involves multi-layered questions of anti-competitive behavior, collusion, and corporate responsibility. 

Along with many other interested parties, such as the Communications Workers of America, Free Press, Public Knowledge, and  the five towns are publicly opposing the deal. They have expressed their derision to the FCC but whether or not they will influence the result remains to be seen.

From a FierceTelecom article by Sean Buckley:

Curt Anderson, chair of the Baltimore City Delegation to the Maryland House of Delegates, expressed...outrage on the agreement the telco made.

"Under this transaction, Baltimore will never get a fiber-optic network, and the city will be at a disadvantage," he said. "The direct job loss will be the hundreds of technicians that would be employed building, installing and maintaining FiOS in the area. The indirect costs of this deal are even higher: the lack of competition in telecommunications will raise prices and reduce service quality.

And:

The deal, said Albany Common Council President Carolyn McLaughlin, "is not in the best interest of those who need to get and stay connected the most and is "a step backwards in bridging the digital divide."

Though these five cities...

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Posted June 3, 2012 by christopher

Susan Crawford was one of the featured presenters at Freedom to Connect 2012 and her presentation was noted by Tech Dirt:

To support her thesis, Crawford presented some stunning numbers. In the last two years, Comcast market share has grown from 16.3 million subscribers to 18.5, a 14 percent growth. Time Warner Cable has grown 10 percent, from 9.2 to 10.7 million customers. Meanwhile, DSL subscribers have plummeted: AT&T and Verizon market share is down 22 and 21 percent respectively.

So, while it's good to be Comcast, it's not good to be an American citizen. Without competition, there's no drive to improve the service. The average speed of an Internet connection in the United States is around 5Mbit/s. An astoundingly low number if you look at other western countries. South Korea, for example, has an average of 50Mbit/s. And faster connections are starting to be implemented around the world.

Posted May 31, 2012 by christopher

In an unsurprising result, voters in Siloam Springs, Arkansas, chose not to build their own FTTH network. The margin was 58% against, 42% for. According to that article, the opponents (bankrolled largely by national cable company Cox) outspent proponents by 3:1.

We previously covered this plan and were concerned that the number one reason identified for proposing the network was to diversify revenue for the local government. Quite frankly, that is a poor reason to go head to head against massive companies like Cox and CenturyLink.

The biggest benefits of community networks tend to be the hard to quantify -- aggregate savings to the community from lower prices from all providers in a competitive environment, increased economic development, better customer service from a local provider, etc. These networks are built to be financially self-sufficient, but we caution against expecting them to be a piggy bank for the local government.

Unlike the successful Longmont approach, where those advocating for the community network engaged others who had been through similar fights elsewhere, it seemed like Siloam Springs preferred not to ask for help. Meanwhile, Cox tapped its nationwide resources to oppose the network, with misinformation like this:

Siloam Springs Opposition

Download the full size flyer here.

Communities that want to build community networks should engage the wider community of community broadband supporters and be prepared for flyers like this one. And when seeking local support, make sure you find messages that resonate. Make sure you read about the grassroots movement in Lafayette in our recent report or how Chattanooga had hundreds of community meetings to explain its plan.

These networks face stiff opposition from entrenched opponents that want to be the sole gatekeepers to the Internet -- ensuring a real choice means doing real organizing.

Posted May 30, 2012 by christopher

In a surprise move, HBC has announced it will end management of FiberNet Monticello, though the actual time frame has not been announced. FiberNet Monticello is a FTTH network approximately 45 miles northwest of Minneapolis. HBC has been operating the publicly owned network, offering triple play services, since inception.

FiberNet Monticello has had a particularly rough road since citizens overwhelmingly voted to build it to create a locally owned alternative to cableco Charter and incumbent telco TDS. TDS landed the first blow against the network with a frivolous lawsuit. Though the courts tossed it out, the proceedings took a year and slightly added to the interest rate Monticello had to pay on its debt.

Since then, TDS invested in its own FTTH connections and Charter engaged in a vicious bout of predatory pricing in their attempt to drive competition out of Monticello.

Throughout it all, the City and HBC worked together to deliver the best broadband and customer service in the area. However, the network has not met its revenue targets (largely due to time lost from the lawsuit) and that has led to discussions about how to ensure the network would become financially self-sufficient as rapidly as possible.

HBC's performance in Monticello has actually been impressive given the anti-competitive tactics of Charter and TDS. If you want to know why we have no cable or broadband competition in America, look no further than the refusal of state and federal agencies to investigate predatory pricing tactics used to deny subscribers to FiberNet Monticello.

Regardless, elected officials in Monticello were not happy with the status quo (covering FiberNet shortfalls from the liquor store fund) and new management will offer an opportunity to chart a new course. Though HBC has decided to withdraw, FiberNet Monticello retains most of its staff and may even be better motivated to meet this challenge. From the City's press release (also below in full):

The City of Monticello would like to express appreciation to HBC for the key role they played in successfully developing and delivering high quality and reliable video, voice and internet service to the community. The HBC legacy in Monticello includes the development of a well-trained FiberNet Monticello staff and the establishment of a strong and loyal customer base, which...

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Posted May 16, 2012 by christopher

One of the reasons we so strongly support local, community owned broadband networks over European-like regulations on private companies is that large institutions regularly game the rules. We wrote about this last year, when Free Press called on the FCC to stop Verizon from ignoring the rules it agreed to for using certain spectrum.

Senator Franken, who has taken a strong interest in preserving the open Internet, has just reminded the FCC that creating rules does no one any good if it refuses to enforce them.

Not only has Comcast announced that its own Netflix-like service does not count against its bandwidth caps, some researchers found evidence that Comcast was prioritizing its own content to be higher quality than rivals could deliver. Comcast has denied this charge and proving it is difficult. Who do you believe? After all, Comcast spent years lying to its own subscribers about the very existence of its bandwidth caps.

The vast majority of the network neutrality debate centers around whether Comcast should be allowed to use its monopoly status as an onramp to the Internet dominate other markets, like delivering movies (as pioneered by Netflix). Comcast and many economists from Chicago say "Heck yes - they can do whatever they like." But the vast majority of us and the FCC have recognized that this is market-destroying behavior, not pro-market behavior.

So when Comcast was allowed to take over NBC Universal, it agreed to certain conditions imposed by the FCC to encourage competition. But the FCC has a long history of not wanting to enforce its own rules because it can be inconvenient to upset some of the most powerful corporations on the planet. Plus, many of the people working in telecommunications policy for the federal government will eventually make much more money working for...

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Posted May 15, 2012 by christopher

Susan Crawford on the importance of government policy. People who are concerned about the future of the Internet need to pay attention or the cable and telephone companies will take over the Internet (or at least access to it). Not because they are evil, but because what is best for them (or what they think is best for them in the short term) is not what is best for the rest of us or the vast majority of businesses that depend on access to the Internet.

 

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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