Tag: "prices"

Posted September 24, 2013 by christopher

For my money, the best headline of last week was "The U.S.'s crap infrastructure threatens the cloud." The rant goes on to explain just how crummy our access to the Internet is.

As a patriotic American, I find the current political atmosphere where telecom lobbyists set the agenda to be a nightmare. All over the world, high-end fiber is being deployed while powerful monopolies in the United States work to prevent it from coming here. Some of those monopolies are even drafting "model legislation" to protect themselves from both community broadband and commercial competition.

He nails a number of important points, including the absurdity of allowing de facto monopolies to write the legislation that governs them. However, Andew Oliver's article is a bit muddled on the issue of "monopoly." I have argued with several people that the term "monopoly" has historically meant firms with large market power, not the more stringent definition of "the only seller" of a good. It is not clear how Oliver is using the term.

Because of this confusion, you can come away from his piece with the firm idea that it is primarily government's fault we have a duopoly of crap DSL and less crappy cable. He repeatedly says "state-sponsored monopolies." However, no local or state government may offer exclusive franchises for cable or telecom services and the federal government hasn't officially backed monopolies for decades.

This is a key point that many still fail to understand - a majority seem to believe that local governments bless monopolies when local governments actually are desperate for more choices. This is why they fall all over themselves to beg Google to invest in their community or they build they own networks (over 400 communities have wired telecom networks that offer services to some local businesses and/or residents).

Poor laws and regulations have helped the massive cable and telephone companies to maintain their status - that is why they spend so much on lobbying and political contributions at all levels of government. They want to and have successfully corrupted the process, neutralizing the power of government to protect consumer interests and prevent a few firms from dominating the market.

...

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Posted September 20, 2013 by lgonzalez

As we recently reported, EPBFiber presented a birthday gift to its current and future Chattanooga customers - gig service for $69.99 per month. In Utah, UTOPIA is extending the list of like-minded publicly owned networks and dropping prices. UTOPIA just announced that gig service is now available for as little as $64.95 per month. According to the Free UTOPIA! website, seven providers are now offering gigabit speeds for $70.00 or less.The Deseret News also reported on the story:

In addition to the exceptional speeds, residential subscribers on the network will also be able to choose their provider based on the services and pricing that best meets their individual needs, explained Gary Jones, UTOPIA chief operating officer.“More residents in Utah have access and the ability to connect to the digital world at the speed of light than anywhere else in the country, and the prices and services being offered by our ISPs make it affordable for many more customers,” Jones said. “This new price is … not much more than most phone and cable companies charge for their basic 8 megabits per second service.”

The News also quoted XMission's Pete Ashdown:

"As the Internet becomes an essential conduit for work, school and entertainment, gigabit availability is essential,” said Pete Ashdown, CEO of XMission. “Only fiber allows this kind of bandwidth and speed."

Just a month ago, we reported that Xmission chose to increase speeds for subscribers of its 50 Mbps to 100 Mbps at no extra charge. As we monitor rates from networks around the country, we find that customers of municipal networks regularly enjoy free speed increases. EPBFiber increased speeds for residential customers for free about a year ago. Tullahoma's LighTUBe upgraded its prior highest tier from 300 Mbps to 1 gig service...

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Posted September 19, 2013 by christopher

Monticello Minnesota may be located 40 miles outside Minneapolis, but it is the center of the planet when it comes to FTTH competition. We have tried and cannot identify another community localed on planet earth with two separate FTTH networks going head to head across the entire community.

We have long written about Monticello, most recently to look at hypocritical criticism of the project (which gives me an opportunity to note a similar dynamic in Lafayette, Louisiana). And we have covered the disappointing news that the network has not produced enough revenue to make full bond payments.

Short explanation for how Monticello came to be unique in having two FTTH networks: Monticello had poor Internet access from Charter and telephone company TDS. Each refused to invest after local businesses and elected officials implored for better networks. Monticello started building its own FTTH network (Monticello FiberNet) and TDS sued to stop the project while suddenly decided to upgrade its slow DSL to fiber. Lawsuit was tossed out and Monticello finished its network.

In most community fiber networks, the DSL provider seems to fade away because it cannot offer the fast speeds of fiber or cable, so the market basically remains a duopoly with the community network replacing the telephone company (which continues to offer cheap, slow DSL to a small number of customers). But in Monticello, Charter and TDS engaged in a price war, which has really hurt the City's ability to generate enough revenue to pay its debt.

Price wars are very hard on new market entrants because they have to amoritze the cost of their investment whereas the incumbents often have already done so. This means incumbents can almost always offer lower prices if they are determined to do so.

In many communities, we have lacked clear evidence of predatory pricing - that is pricing below the actual cost of service to run competitors out of business. This would violate federal law (if any agency bothered to enforce it)....

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Posted September 18, 2013 by christopher

Chattanooga's EPB Fiber, a municipal FTTH system owned by the city's electric power board, has dramatically lowered its prices for the gigabit connection and increased all Internet speed tiers.

The slowest connection you can get from EPB Fiber is 100 Mbps symmetrical - and it comes at the same price that most cable tiers start at for much slower connections - $58/month. Want a gig? That is now $70/month. Here is the announcement:

Video streaming by Ustream

The Washington Post covered the story, including several quotes from me.

DePriest tells me that EPB's fiber network is "a great profit center." In the four years the service has been active, the utility company has increased its mid-tier speeds three times — from 15 Mbps to 30 Mbps, from 30 Mbps to 50 Mbps and now from 50 Mbps to 100 Mbps. About 2,500 elite users will enjoy 1-gig speeds by the beginning of October.

Phil Dampier has more coverage at StoptheCap.com, including an analysis of AT&T and Comcast competition.

AT&T charges $65 a month for 24/3Mbps service — its fastest — with a 250GB monthly usage cap, currently not enforced. For $5 more, EPB customers get 1,000/1,000Mbps with no usage limits or overlimit fees.

A recent article in the Chattanoogan noted that Chattanooga had surpassed 50,000 subscribers and was on path to surpass Comcast in subscriber base locally.

Mr. DePriest said Comcast had some 122,000 customers on the EPB grid when EPB launched its rival program. He said Comcast is down to around 75,000 and will likely drop to around 60,000 next year....

Posted July 17, 2013 by christopher

Patrick Lucey of the Open Technology Institute at the New America Foundation, posted this excellent story around the time we published our rant about the FCC's cave-in to industry pressure for no good reason. We liked it so much, we asked to repost it.

In late June the Federal Communications Commission (FCC) issued an order reforming the way it collects data on broadband services. Broadband providers must file forms, known as Form 477, that contain information about their broadband network deployment, customer subscriptions, and speeds offered across the country. The order seeks to expand the FCC’s current broadband data collection efforts and also assume responsibility for administering theNational Broadband Map, initially created by the National Telecommunications and Information Agency (NTIA). Unfortunately, the vast majority of the order’s contents seem out of line with that goal.

Federal authorities need to collect good data in order to make informed policy decisions. However, the June data order does not add broadband pricing information to the data the FCC would seek to collect. The price residential customers pay for internet access is an important piece of information, not only to understand the state of competition for broadband but also to provide insight on whether services are available at affordable rates.

Past surveys from both the FCC and NTIA have shown...

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Posted July 12, 2013 by lgonzalez

The FCC does not have a good sense of what is happening outside DC in terms of broadband availability and data. This has been a conscious choice - it has refused calls (even those made by the FCC itself) to collect useful data that would lead to data-driven policies to encourage the investment we need.

Not only has the FCC refused to collect data, it refuses to take action as companies like Time Warner Cable refuse to tell potential subscribers what the cost of service is. We have first hand experience along these lines - our goal was to document actual consumers prices for Internet access beyond promotional pricing. When we asked Time Warner Cable sales reps for prices after introductory deals expire, they would not quote a price. They would not give an estimate or provide any examples. 

If you are looking for evidence of a failed market, we submit that when a seller can refuse to quote the price that one will pay in 7 months for the service, or even ballpark it, with impunity, the market is busted. Time Warner Cable isn't worried about driving customers away - it many areas of the country it is only real option for not too slow Internet access. So it does as it pleases.

We also contacted the FCC and asked staff where we could find information on the actual prices of broadband. The person on the other end sounded defeated as her voice dropped. "Oh, we don't collect that," she said, "We don't know any one who does. Have you tried calling the providers?"

Call us old fashioned, but we think it's crazy. Even though Time Warner Cable, AT&T, Verizon, CenturyLink, etc. are some of the largest corporations in our country, affecting the household finances of tens of millions of Americans, their prices for connectivity are masked in a Cloak of Invisibility with the tacit approval of the regulatory body charged with protecting the public.

The Free Press documents a recent missed opportunity to rectify past decisions that have led to a data black hole:

On Thursday, the Federal Communications Commission approved changes to its broadband data-collection practices in an order continuing the mapping efforts begun by the National Telecommunications Information Administration. The FCC, however, declined to adopt its own prior proposal...

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Posted May 13, 2013 by lgonzalez

In January, Longmont Power and Communications (LPC) announced they would begin connecting businesses located within 500 feet of the existing network. As we reported, local businesses were chomping at the bit to get hooked up and enjoy the high-speed next generation network. Even without efforts at marketing or advertising, more businesses have added themselves to the queue. LPC will present the formal business plan for expanding the network to the City Council on May 14th. Tony Kindelspire recently reported on the race to get on LPC's network in the Longmont Times-Call:

"We are bringing to council a business plan to build out all of Longmont," [Vince] Jordan, [Broadband Services Manager], said. "It's the whole enchilada."

The fact that there has so far been only limited rollout is due to economics. Currently, the installations are being paid for from a reserve fund that Longmont Power has built up over the years leasing portions of its fiber-optic loop to entities such as Longmont United Hospital and a third-party provider that services the school district. Those leases bring in about $250,000 annually, Jordan said.

For 2013, the Longmont City Council authorized LPC to use $375,000 of that reserve fund to begin connecting businesses and residents to the loop.

This model works, but does not connect everyone fast enough for their liking:

To expedite the build-out, extra up-front dollars will have to be allocated, but where those dollars will come from is yet to be determined, Jordan said, adding that ultimately, the decision will lie with City Council.

Map of Longmont Fiber Rings

Right now, Longmont will cover the initial cost of connecting subscribers except in cases of extraordinarily high cost cases. If it would cost $10,000 to install but the payback to the utility in 2.5 years is only $6,000, a customer would have to cover the $4,000 difference presently. While there are over 1,300 businesses with in 500 feet of the network, connection...

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Posted April 25, 2013 by lgonzalez

Ottawa, located in east central Kansas, recently launched its own municipal fiber network. The community of 13,000 in Franklin County watched nearby Chanute build and establish its own broadband utility. Ottawa plans a similar incremental strategy. Both communities boast strong farming traditions and host industrial employers that could not get what they needed from the existing providers.

I spoke with Chuck Bigham, IT Director for the City of Ottawa, who gave me some nuts and bolts on the network. I also touched base with City Manager Richard U. Nienstedt, both are heavily involved in the establishment of the network.

Like in Chanute, local leaders have long nourished a vision for better connectivity. In recent years, they realized the vision was not only attainable, but necessary for the community to thrive.

Approximately seventeen miles of fiber, installed by USD 290 and Franklin County in the 1990s, was already in the ground when the project began. Students and staff connected to the Internet and linked the 8-10 school district facilities via its fiber network. These pre-existing resources became the backbone of Ottawa's new utility. Cooperation between the City Municipal Utility, USD 290, and Franklin County facilitated the configuration of the new network. Ottawa now provides business Internet access, expanded educational opportunities, and a higher level of service than was previously available.

Two years ago, the City and its Chamber of Commerce reached out to major businesses to determine the need for broadband. They found businesses in Ottawa were connected through existing providers, but were unhappy with price and level of service. The community's industrial park seemed especially disadvantaged. Businesses needed better upload speeds than the existing T1s, which ran up to $600 per month. While DS3 connections were available, they were unaffordable and there was no level of service between the two options. Businesses could not convince AT&T to offer something they could afford and, as Bigham noted, the telecom giant appeared to be "milking the cow."

Map of Ottawa, Kansas

This is a common complaint among communities - the big national...

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Posted April 3, 2013 by lgonzalez

Spencer Municipal Utilities (SMU) of Spencer, Iowa, will be replacing old copper cable with fiber this summer. According to the Daily Reporter, customers can expect the upgrade with no increase in rates. From the article:

"Just like internet service has evolved from dial up to DSL and cable modem, fiber will give customers the next level of service to continue to improve the way they live, work and play here in Spencer," Amanda Gloyd, SMU marketing and community relations manager," said.

"We want to keep our customers on the cutting edge," she said.

Plans are to upgrade around 700 customers in one section of town during this first phase at a cost of around $2 million.

"This project is all paid for with cash in the bank," [General Manager Steve] Pick said. "This is an investment in the system."

SMU has offered telecommunications services to customers since 2000 and supplies water, electric, cable tv, Internet, telephone, and wireless service in the town of about 11,000. Rates for Internet range from $20 to $225 per month with cable tv analog Basic service as low as $14 and Basic Plus at $46. As options are added, monthly fees increase.

We see regular upgrades in service with little or no increase in price from many municipal networks. Comparatively, increases in price with little or no increase in service is a typical business decision from the private sector. Unlike AT&T, CenturyLink, or Time Warner Cable, municipal networks like SMU consider customers to be shareholders, and do what is best for the community at large.

We spoke with Curtis Dean of the Iowa Association of Municipal Utilities for episode 13 of the Community Broadband Bits podcast. He told us about the tradition in Iowa for self-reliance and its manifestation in the telecommunications industry.

Curtis also told us about Hansen's Clothing, a century-old men's clothier in Spencer. This community staple was on the edge of closing its doors until broadband came to town. Hansen's was able to begin selling high quality clothing online, offering pieces...

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Posted February 26, 2013 by christopher

Morristown, Tennessee, is one of very few communities where anyone in town can immediately get a gigabit delivered to their home and business. General Manager and CEO Jody Wigington of the municipal electric utility, Morristown Utility Systems, joins me to discuss why they built their network and how it is has benefited the community.

The network has also attracted businesses that otherwise might not consider the community for an investment. Competing providers have kept their prices lower than they do in communities with less competition, a tremendous benefit. MUS Fiber keeps more than $3 million in the community each year. Just think of that -- distributing $3 million among the residents of a community each year. That is real money that helps boost the local businesses.

We also talk about the origin of the system, how it has benefited the electric utility, and advice for other communities that are considering their own network investments. Read our additional coverage of MUS Fiber.

Read the transcript from this conversation here.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

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Thanks to D. Charles Speer & the Helix for the music, licensed using Creative Commons.

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