S&P Global Market Intelligence - May 26, 2017

Hard Data on Municipal Broadband Networks

Written by Sarah Barry James

There is a dearth of good data around municipal broadband networks, and the data that is available raises some tough questions.

A new study from University of Pennsylvania Law School Professor Christopher Yoo and co-author Timothy Pfenninger, a law student, identified 88 municipal fiber projects across the country, 20 of which report the financial results of their broadband operations separately from the results of their electric power operations. Municipal broadband networks are owned and operated by localities, often in connection with the local utility.

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Yet Christopher Mitchell, director of the Community Broadband Networks Initiative at the Institute for Local Self-Reliance, argued that Yoo's study did not present an entirely accurate or up-to-date picture of U.S. municipal networks.

"When I looked at the 20 communities that he studied — and his methodology for picking those is totally reasonable and he did not cherry pick them — I was not surprised at his results because many of those networks are either in very small communities … and the others were often in the early years of a buildout during a period of deep recession," Mitchell said.

As an example, Mitchell pointed to Electric Power Board's municipal broadband network in Chattanooga, Tenn. — one of the five networks Yoo identified as having positive cash flow but at such a low level that it would take more than 100 years to recover project costs.

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In fact, without the revenue generated by the fiber-optics business, EPB estimated it would have had to raise electric rates by 7% this year.

According to Mitchell, Yoo's study captured the Chattanooga network when it was still "small and growing," but misses "what's going to happen for the rest of the life of the network, which I think is the more important part."

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TechDirt - May 4, 2017

Maine The Latest State To Try And Let Giant Broadband Providers Write Shitty, Protectionist State Law

Written by Karl Bode

One of (several) reasons why American broadband is so uncompetitive is the fact that we continue to let giant broadband mono/duopolies quite literally write awful state telecom law. As we've long noted, more than twenty different states have passed laws making it difficult to impossible for towns and cities to improve their local broadband networks -- even in instances when the entrenched duopoly refuses to. Many of these laws even ban towns and cities from entering into public/private partnerships with the likes of Google Fiber. It's pure protectionism.

Maine is the 49th ranked state in broadband speed and coverage -- in large part due to rural markets. Despite countless years of subsidies, broadband providers consistently refuse to seriously upgrade these areas at any scale due to costs. And yet they refuse to let the towns do it themselves, either. State Representative Nate Wadsworth has introduced HP1040, aka "An Act To Encourage Broadband Development through Private Investment." Except like so many of these bills, the proposed law's name is a stark 180 from what the legislative measure actually does.

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And laws banning municipal broadband -- and especially public/private partnerships -- accomplish the exact opposite of that. And while large ISPs (and their ocean of paid think tankers, economists, and other doller-per-holler professionals) have tried to make this a partisan issue -- the vast majority of municipal networks are built in Conservative areas with broad, bipartisan support. That's because there's one thing we can all agree on: nobody likes the local cable and broadband monopoly.

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Tennessee Legislature Passes Broadband Accessibility Act, Delivers Hollow "Victory"

While Governor Haslam's Signature Legislation Sounds Great, AT&T Will Be Laughing all the Way to the Bank

Contact:

Christopher Mitchell

christopher@ilsr.org

MINNEAPOLIS, MN - Late yesterday, the Tennessee Legislature officially sent Governor Bill Haslam's signature legislation, the Broadband Accessibility Act of 2017, to his desk. Unfortunately, this bill is more about making taxpayer dollars accessible to AT&T than ensuring rural regions get modern Internet access.

"What we have on one side is a taxpayer-funded subsidy program, and on the other we have a subscriber-based model," says Christopher Mitchell, director of the Community Broadband Networks initiative at the Institute for Local Self-Reliance. "The tragic thing is, AT&T is a taxpayer subsidized monopoly in rural Tennessee that only has to provide a service far slower than the definition of broadband. Locally-rooted networks like Chattanooga's EPB not only offer nation-leading services but have tremendous community support."

With this bill's passage, the Tennessee General Assembly will likely not pass any other broadband legislation during this session. The Broadband Accessibility Act won't improve Tennessee's rating as 29th in Internet connectivity, but it will do a great job of lining AT&T's pockets. As we've tracked throughout the session, there are a number of bills worth supporting that would actually increase connectivity and allow municipalities to take part in their own broadband future.

Mitchell is deeply frustrated with this situation: "Chattanooga is the only city on this planet that has universal access to 10 Gigabit symmetrical Internet access. It is a stunning achievement and Tennessee taxpayers may subsidize AT&T to build DSL service to Chattanooga's neighbors rather than letting the Gig City expand its fiber to neighbors at no cost to taxpayers. Tennessee will literally be paying AT&T to provide a service 1000x slower... Read more

A recent edition of State Scoop published Christopher's thoughts on the state of competition in the broadband market in the United States. In the piece, Christopher argues how incumbent Internet Service Providers translate their economic power into political power, as seen in the recent vote to strike down consumer privacy protections. He also more widely distributes our recent infographic, "The Market Has Spoken. The Market Is Broken." We've reproduced the op-ed here:

Paths for repairing a broken broadband market

Infographic & commentary: Christopher Mitchell of the Institute for Local Self-Reliance says the new anti-privacy legislation passing through Congress offers further evidence that America's broadband market is broken, but not beyond repair.

To be charitable, one of the reasons that Republicans in Congress moved so quickly to eviscerate privacy protections for internet access subscribers was an overriding belief that the market provides better protection than regulators. To be less charitable, it is possible all the lobbyist contributions to their campaigns had an impact.

But the market is not providing a check to AT&T or Comcast power. They are effectively monopolies — and as we just saw — can translate their market power into political power to wipe out regulations they find annoying.

At the Institute for Local Self-Reliance, where we work to support local economies, this broken market is a major problem. Cable monopolies are bad for local businesses, which become less competitive from paying too much for unreliable Internet access. Communities cannot thrive without high quality Internet access today. 

So we created the infographic below, which offers evidence for our claim that the market is broken. The Federal Communications Commission has documented that most households don’t have a choice in broadband providers, let alone a meaningful choice (where you actually like one of the companies you have to choose between).

Despite widespread... Read more