Tag: "competition"

Posted July 23, 2010 by christopher

A Qwest sales person admits on tape that Qwest is trying to eliminate competition by purging the network of independent ISPs. Listen to the conversation here.

Customer: "Qwest is trying to eliminate competition?"

Customer Service Rep: "In a way."

Undoubtedly, Qwest will (if it has not already) disavow this quote and suggest the CSR just didn't know what she was talking about. But they are clearly trying to remove competition - something we have witnessed in the Twin Cities of Minnesota as the good ISPs (for instance, IP House) are slowly strangled because they are not permitted resell the faster circuits. Additionally, I believe allegations that Qwest deliberately allows more congestion on lines they resell than lines where they are the sole retailer.

Our office uses IP House and we have never had anything but good experiences with them. But we need a faster services, so we can choose between slightly faster options with Qwest or much faster options with Comcast. We have no choice but to take service from a crappy massive company if we want to maintain productivity.

Some would claim that we have additional choices because USIW runs a Wi-Fi network in Minneapolis (subsidized by the City) but the network's speeds cannot compare to Comcast and it is far less reliable than the wired network alternatives (though Qwest's reliability in some areas may actually be worse).

I found this story via the Free UTOPIA blog but it links to the original source on Xmission - a UTOPIA service provider and DSL resellter.

Posted July 21, 2010 by christopher

Last month, Mark Sullivan wrote a column expounding on the obvious: deregulation of broadband service providers has failed to produce the promised competition, Americans pay more for less than peers in other countries, and this is an area where smart government policy would benefit everyone.

When it comes to broadband, I’m a socialist. Why? Because broadband service in the United States is currently provided by a cableco/telco duopoly, and, as such, is slower and more expensive than in most of the developed world, studies show. Because I don't believe the FCC can fix that lack of competition within the current regulatory framework, despite the ambitious goals set forth in its National Broadband Plan. Because a reasonably-priced alternative to cable or telco broadband might be just the thing to bring competition to the industry and spur U.S. broadband cost and quality to world-class levels. Because our connectedness increasingly dictates our our economic standing in the world: Broadband is as important to us as the interstate highway system--a public works project--was to Eisenhower-era America.

Good column.

Notice that the commenters at the bottom pile on against the idea - though they clearly have little idea what they are talking about. There has been no discussion of the government taking over networks owned by the private sector and there is little reason to believe local government would be more likely to violate privacy than a company motivated solely by profits ... in fact, I would argue the private sector is considerably more likely to violate privacy than local governments.

As for Brett Glass, his comments long ago proved that he lives in a fantasy world. In his small town, there are 9 broadband competitors! Well, at least we know where the competition is - it surely is not present in my community.

Posted July 16, 2010 by christopher

A recent article discussing testimony from the President of the industry trade group, National Cable & Telecommunications Association (NCTA) reminded me once again that Congress and the FCC have utterly given up on true broadband competition for millions of of Americans.

As with the broadband stimulus funds being handed out by the Commerce Department, NCTA is concerned that the USF money not go to overbuild its members. "It would be a poor use of scarce government resources to subsidize a broadband competitor in communities--including many small, rural communities -where cable operators have invested risk capital to deploy broadband services," McSlarrow says.

This seems like a common sense argument. Why would we want to subsidize broadband for those who already have a single option (underserved) when others have no choice at all (unserved)? Unfortunately, building networks to solve the problem of the unserved is all but impossible without simultaneously serving some who are underserved. This is because the unserved are often in areas so remote and expensive to serve, there is no sustainable business model to serve only them.

So the idea that we could somehow only target the unserved with networks is extremely suspect. Unless we want to endlessly subsidize networks in these areas (which companies like Qwest emphatically want because they would likely collect those subsides endlessly), we need to encourage sustainable networks that reach across those already served, underserved, and unserved.

He added that it also might discourage the incumbent from continuing to risk that capital. "Government subsidies for one competitor in markets already served by broadband also might discourage the existing provider from making continued investments in its network facilities.

I certainly respect this argument up to a point. But when it comes to essential infrastructure, we know that most existing providers (particularly absentee-owned massive companies) are delaying investments in network facilities anyway because the lack of true competition allows them to delay making the investments more common in our international peers (where true competition exists, often as a result of smarter government policies than we can muster here). The principle of self-...

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Posted June 28, 2010 by christopher

In an editorial about the LUS Fiber lawsuit against NCTC, the local Lafayette paper made the following observation:

We've had our own reservations about LUS Fiber to the Home, based on concerns about a government enterprise encroaching on a market in which private-sector entities were already providing service. But LUS has, from all available evidence, enhanced the competition in the local marketplace in terms of both price and technology.

Those who claim community broadband networks decrease competition and incumbent investment do so against all empirical evidence.

Posted June 21, 2010 by christopher

Powell, a small community in Wyoming, has bought its own network from the investors who financed it [Powell Tribune], eighteen years ahead of schedule. For a short history of Powellink, see Breaking the Broadband Monopoly.

The decision, unanimously agreed to by City Council, came from the realization that the City's reserves were earning very little interest while they were paying a higher interest rates to those who financed the network. So they decided to invest in themselves.

Under the new agreement, Powellink will become a fifth enterprise for the city, joining the electric, water, waste water and sanitation enterprises. The other four enterprises will loan Powellink the $6.5 million, and payments from service providers using Powellink — such as TCT — will go back to the enterprises to pay off the loan.

City Administrator Zane Logan had previously told me that he thought Powellink was a much better approach to attracting jobs to the area than the approach frequently used by communities - tax breaks to companies in return for creating jobs. In the Powell Tribune article, he explained how this approach allows Powell to be more self-reliant.

Logan said he believes the new agreement will help Powell during a difficult economic climate. The state cut its funding of cities and towns this year, and sales tax revenues are down.

“We’re trying to help ourselves and not be dependent on the state,” he said. “The Legislature is saying cities need to take care of themselves, and I like to think that Powell is doing that.”

Local cooperative TCT had the right to another four years of exclusive operation as the sole service provider but gave that up, meaning the network will now be open access. In return, TCT does not have to guarantee revenue to the City (as it agreed to do in each year it was an exclusive service provider).

These changes come about as Cablevision bought Bresnan, the cable incumbent that had radically lowered rates to compete with Powellink. It will be interesting to see how Cablevision continues or changes company policy in Powell.

Photo courtesy of Ernie Bray...

Posted June 15, 2010 by christopher

Lafayette Utilities System has filed a complaint with the FCC following what seems to be a rather arbitrary decision by the National Cable Television Cooperative (NCTC) to deny Lafayette as a member. This is a crucial issue for communities that want to build fiber-optic networks, so we will dig in and offer an in-depth explanation.

It all starts with the business model. Fiber-optic networks are fantastically expensive and are expected to be financed entirely with revenues from subscribers. Though communities typically want fiber-optic networks for the broadband capacity, they find themselves having to offer cable television services also to ensure they will attract enough subscribers to make the debt payments on the network.

Unfortunately, cable television services are the most difficult and expensive part of the triple-play (broadband, telephone, cable tv). A community network has to sign deals with different content providers in order to put together its channel lineup. Even a community network with 100,000 subscribers has little power over the companies with channels like ESPN, the Disney Channel, Discovery, MTV, Food Network, and others. Thus, it will have to pay more for those channels than massive networks like Comcast that have many millions of subscribers and therefore a stronger negotiating position. LUS has noted that video programming is the "largest single on-going cost" it incurs in the network.

Enter the NCTC. By forming a cooperative, many small providers (public and private) were able to gain negotiating power over content owners and even hardware manufacturers to cut costs to members by buying in bulk. In recent years, the size of NCTC rivaled that of major national providers like Charter and Cox cable. All three parties stood to gain by bringing Cox and Charter into NCTC in 2009. The addition grew NCTC significantly -- only Comcast has more subscribers currently.

The advantages of NCTC are quite significant and worth reiterating because it is a reminder of the ways in which massive private companies have the playing field tilted in their direction. Without access to NCTC, communities have to pay more for the same content and equipment (NCTC savings may start at 15%-20%. From the complaint:

NCTC market power also enables it to obtain much bigger, better, more flexible, and less costly packages, than any individual small cable...

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Posted June 4, 2010 by christopher

It's fast and it's symmetrical. Chattanooga, the nation's largest muni FTTH network will be offering the fastest residential package in the country by the end of the month: 150 Mbps.

Chattanooga's Electric Power Board (EPB) is ahead of schedule in the fiber rollout, planning to offer triple-play services to all 145,000 residential customers in its electrical territory by the end of the year. Dave Flessner at the Chattanooga Times Free Press covered this story and the paper posted a short audio clip of EPB President Harold DePriest at the press conference.

EPBFi is up to almost 10,000 customers, a number expected to double by the end of the year.

Comcast is responding to this aggressive muni network:

Comcast Corp. remains Chattanooga's biggest video provider and has also increased the speed of its Internet offerings and the number of high-definition television channels and movies it provides for its subscribers.

Tennessee, home to the famous Tennessee Valley Authority that brought the electrical grid the mountains long neglected by the private sector, continues to value public ownership of infrastructure:

Hamilton County Mayor Claude Ramsey likened EPB's broadband expansions to what the Tennessee Valley Authority brought to the region during the Great Depression.

"What is happening today is equivalent to electricity coming to the valley in the 1930s," he said.

I'm guessing this 150Mbps plan is the first of more impressive announcements to come out of Chattanooga as they take advantage of this key community asset. The 150 Mbps press release is available here.

The article also noted a major economic development win in Bristol Tennessee - a $20 million newspaper printing plant that would not have been possible without their muni network. This testimonial is located toward the bottom of the page.

Hyatt [company VP] acknowledged that the high-speed data transfer and reliable fiber optics were the main reasons for locating the facility in the park. This service is essential as companies move deeper into the information age, especially with...

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Posted May 13, 2010 by christopher

UTOPIA, the open access FTTH network in several cities of Utah, has been seeking some $20 million to continue adding new subscribers to the network. The cities involved seem to be on board, committing to the funding following recent successes.

Mayor Mike Winder, of West Valley City - one of the UTOPIA cities, makes the case for digging deeper to lend money to the network:

UTOPIA's good news is that since June 2008, it's added over 3,500 new customers and reached about 10,000 subscribers, the number of service providers on the network has grown from three to 12, and national voices — from Google to the New York Times — are trumpeting the virtues of an open-fiber network.

The plain and simple fact is that these towns have already committed to the project; they are vested in its success. Now under better management, perhaps his whole town will have access to fastest speeds available in the country:

Only 23 percent of my city has UTOPIA fiber, and there are homes and businesses that want access to the speed of light. After weighing the issue for months, I've concluded that we need to bring UTOPIA fiber to the rest of West Valley City, and just as importantly, to grow UTOPIA to profitability. I will be encouraging my council and my colleagues in UTOPIA cities around the state to join me in charging forward.

A press release from UTOPIA announces ambitious plans:

The new plan anticipates adding about 20,000 more customers over the next several years. “We’ve known for a long time that UTOPIA needs a much larger customer base, and a good mix of business and residential customers, to make the books balance,” says Murray Mayor Dan Snarr. “Our cities are already obligated to the network for years to come, so we need to grow to critical mass rapidly, based on a plan to ensure long-term financial health.”

And Orem's mayor reiterated UTOPIA's philosophy (noting that the NY Times have called for open access networks):

Governments build roads, and allow FedEx and UPS to compete on...

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Posted May 7, 2010 by christopher

Time Warner, AT&T, and other incumbents have radically changed their strategy to prevent broadband competition in North Carolina via new restrictions that are being debated in the Legislature currently. This switch in strategy offers more proof that they stand on no principle aside from protecting their monopoly.

The famous HB 1252 in North Carolina is back... but different. In the past, the telcos and cablecos have argued that municipal broadband networks are unfair to them because the city could use tax dollars in some way to build the network (ignoring that most publicly owned networks do not use any tax dollars). Now, these companies are pushing a bill to require financing backed by taxpayer dollars. Seems like an odd switcheroo.

As one might expect from companies like AT&T and Time Warner, who have no respect for the public process, the bill was kept top secret until debated in committee, giving only the side filled with monied interests and lawyers an opportunity to prepare. The bill (that we have made available here as there is no official version yet) would not just place significant restrictions on new publicly owned networks, but would also handcuff existing networks like Salisbury and Greenlight in Wilson.

To reiterate, this bill will damage the most advanced broadband networks available in North Carolina today. Sounds like North Carolina wants to take up Mayor Joey Durel in Lafayette on his offer to welcome the businesses moving from North Carolina to Lafayette with a big pot of gumbo.

Fascinating that after an FCC Commissioner noted that the US Broadband Plan recognizes the right for communities to build their own broadband infrastructure, North Carolina is deciding it prefers to preclude any broadband competition, sticking with its last-century DSL and cable. Just fascinating.

The Salisbury Post has been watching and recently published a scathing editorial against the bill. This is one paragraph, but the whole editorial is well worth reading.

Yet, if the HB 1252's intent becomes reality, such areas will be severely hobbled in their near-term ability to tap into the broadband revolution. Private...

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Posted May 1, 2010 by christopher

Paul Venezia is one of the few who noted a recent Lessig presentation that discusses broadband policy. Larry Lessig's presentation offers an excellent short history of broadband and telecom history - from the beginning of AT&T to the National Broadband Plan. The video runs an hour, but should be essential viewing for anyone who wants to understand why the U.S. continues to fall behind international peers in broadband. Lessig's answer is that we have lost our independence. Large corporate interests dominate the federal government as well as the state legislatures, resulting in a government that too often bends to their will. Lessig's presentation covers the essential role of government in forcing AT&T to open the phone network (paving the way for fax machines, Sports Illustrated football phones, and eventually dial-up modems). Key takeaway: the owner of a network makes the rules and determines who is allowed to use it and under what circumstances. Among other issues, he offers the most accessible explanation of what happened with the FCC/Comcast court ruling that has (temporarily - we hope) rendered the FCC unable to stop carriers from telling users what sites they can visit or adjusting the speeds to some sites based on the carriers' business model. He notes his disappointment with the National Broadband Plan - where the Obama "reality-based" Administration chose to ignore reality and take the easy road of not challenging powerful incumbent telecom interests. Toward the end, he raises the chilling prospect of the federal government instituting a form of the PATRIOT ACT on the Internet in the future. Watching this reminded me that we believe government has an essential role in building and owning infrastructure but we strongly support Constitutional checks against the government getting too involved in policing content. This is an excellent presentation - particularly for those who are not as familiar with the history of the AT&T, the FCC, Carterphone, and the competition we briefly had among service providers in the days of dial-up.

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