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The Broken Promises of Big Telecom: ‘Fiber for All’ Funding Diverted for High Profit Wireless

Phillip Dampier November 21, 2012 Astroturf, AT&T, Audio, Broadband Speed, Comcast/Xfinity, Community Networks, Competition, Consumer News, Data Caps, Public Policy & Gov't, Rural Broadband, Verizon, Wireless Broadband Comments Off on The Broken Promises of Big Telecom: ‘Fiber for All’ Funding Diverted for High Profit Wireless

The United States once led the world in Internet speed and infrastructure. Now, according to one estimate, it ranks at about 29. Brooke talks to David Cay Johnston, journalist and author of “The Fine Print: How Big Companies Use Plain English to Rob You Blind,” who says that companies continue to raise prices and engage in lobbying efforts to rewrite regulation, while avoiding necessary upgrades to infrastructure that would speed up America’s Internet.  Companies promised major fiber broadband upgrades, but diverted that money to building a wireless conglomerate instead. (6 minutes)

Another Lafayette Headed for Fiber-Fast Broadband; Comcast May See Competition in Indiana

Phillip Dampier November 20, 2012 Broadband Speed, Comcast/Xfinity, Community Networks, Competition, Consumer News, Metronet, Public Policy & Gov't Comments Off on Another Lafayette Headed for Fiber-Fast Broadband; Comcast May See Competition in Indiana

Lafayette, Ind. is just one city council vote away from securing fiber broadband competition for the community of 67,000 residents in west-central Indiana.

Fiber provider Metronet is interested in providing broadband, television, and phone competition to business and residential customers who currently have one choice for cable: Comcast. Frontier provides satellite and DSL broadband to parts of the community as well, but neither stands a chance of competing against the fiber speeds Metronet is capable of providing Tippecanoe county.

Two previous city council votes were in favor of the Metronet project, which will not cost the city a dime.

“The city is issuing bonds that private investors are going to buy,” city counselor Eddie VanBogaert told The Exponent. “We have these people already lined up. This company is going to be able to get a tax break effectively on putting about $60 million worth of fiber infrastructure across the city.”

Metronet intends to start operating in more populated parts of the community and build its network further out over time. The city will hold a right of refusal on the lines, which means if Metronet were to fail or seek to sell its operations, the city can control who ultimately runs the fiber infrastructure. In the past, cable operators have ended up launching predatory price wars against new competitors, eventually buying them out and raise prices back to pre-competition levels.

The final vote by the city council will be held Dec. 3.

Stop the Cap! first reported on this venture in a piece published in January.

Community-Owned MI-Connection Launches Speed War That Benefits North Carolina

Phillip Dampier November 8, 2012 Broadband Speed, Community Networks, Competition, Consumer News, Editorial & Site News, MI-Connection, Public Policy & Gov't Comments Off on Community-Owned MI-Connection Launches Speed War That Benefits North Carolina

A community-owned cable system that critics called “a municipal broadband failure” is proving to be anything but as it aggressively launches a broadband speed war and is narrowing its losses on the road to profitability.

MI-Connection is the community-owned cable system serving Mooresville, Davidson, and Cornelius, N.C.

Originally acquired in 2007 from bankrupt Adelphia Cable, MI-Connection has been a favorite target for municipal broadband critics who have painted the operation as an experiment gone wrong and a financial failure. But the system’s latest financial results and its forthcoming free broadband speed upgrades tell a different story.

Residents will see major boosts in their broadband speeds for no additional charge in December thanks to a broadband service upgrade. Meanwhile, competitor Time Warner Cable has announced new fees for cable modem rentals that will raise many customer bills by $4 a month. (MI-Connection does not charge customers a rental fee when they have just one cable modem on their account.)

The speed increases will provide the fastest download-upload speed combination in the area, thanks to faster upstream speeds. These upgrades launch Dec. 10:

  • 8/4Mbps service upgrades to 10/5Mbps
  • 12/4Mbps service upgrades to 15/5Mbps
  • 16/4Mbps service upgrades to 20/5Mbps
  • 20/4Mbps service upgrades to 30/10Mbps

Also on that date, MI-Connection will launch its fastest Internet tier yet, tentatively dubbed Warp Speed, offering 60/10Mbps service with a free wireless router for bundled customers, selling faster service at up to $20 less per month than what Time Warner charges:

  • $99.95/month broadband service only
  • $89.95/month when bundled with one other service
  • $79.95/month when bundled with phone and television service

Warp Speed will be the fastest residential broadband available in Mecklenburg and Iredell counties.

MI-Connection hopes accelerating improvements in broadband will also accelerate additional earnings. MI-Connection continues to earn the bulk of its revenue from television, with broadband and phone lagging behind. But the biggest growth in revenue year over year comes from broadband service.

Last summer, MI-Connection reached another milestone — it delivered its first cash payments back to the communities that took a chance on owning and running their own telecommunications provider. Although the total amount of $277,000 was modest, and the company still has to pay down debt incurred from purchasing and upgrading the cable system, it was a symbolic victory against anti-government, anti-municipal broadband naysayers.

More elusive is tracking the amount of money saved by residents finding Time Warner Cable and area phone companies ready and willing to offer stunning rate cuts in customer retention efforts.

Stop the Cap! has tracked some of those offers over the past several years, based on reader input.

Time Warner Cable’s retention department has offered North Carolina customers with active competition in their area prices as low as $100 a month (after taxes and fees) for triple play packages that include a free year of Showtime and 30/5Mbps broadband. Customers who only want broadband and television have been able to negotiate rates averaging $70 a month, especially after pointing out MI-Connection provides a year of its own phone, broadband, and TV service for $89.99 a month, including three free months of HBO.

“Year after year, renewing these prices just takes a phone call mentioning you received a flyer from MI-Connection offering more for less,” says Stop the Cap! reader Sam, who we contacted this morning for an update on our earlier story in April. “Whether you stay with Time Warner or switch to MI-Connection, you can easily save dozens of dollars a month just mentioning one provider to the other.”

Courtesy: Davidson News

Sam remains a Time Warner Cable customer based on what he calls “a simple matter of economics and what my wife wants to spend.” But he still supports the fact MI-Connection is there, even though it has created some early headaches for Mooresville, Davidson, and Cornelius.

“The conservatives have demagogued MI-Connection to death to win seats in local government but recently have stopped attacking it as an outright failure and are now claiming they want to make it successful so they can sell it off in a few years, probably to their pals at Time Warner,” Sam reflects.

“At the rate MI-Connection is cutting their losses, it might actually be profitable then,” Sam argues. “Selling it would be stupid. But a lot of the current crowd is hellbent on selling it no matter what, mostly for ideological reasons, and after Time Warner buys it for cheap, we’ll all pay even more when they put the rates back up.”

Critics of MI-Connection have help from various astroturf groups, backed largely by telecommunications companies who oppose government involvement in broadband. Particularly notorious is the “Coalition for the New Economy,” which issues negative reports about municipal broadband while burying the fact the group is funded in part by AT&T, Time Warner Cable, and other Big Telecom lobbyists.

The “Coalition” issues various reports mostly summarizing news accounts about community broadband that highlight struggles and ignore successes, while concluding that community broadband is interfering with private providers trying to hurry upgrades into neglected areas.

“A report from some group that lies never brought better broadband access to anyone in North Carolina,” Sam said. “MI-Connection has become a thorn that must be pulled from Time Warner’s backside because MI actually does provide better service.”

Debunking ALEC, Broadband Edition

Todd O'Boyle November 8, 2012 Comcast/Xfinity, Community Networks, Competition, Consumer News, Data Caps, Editorial & Site News, EPB Fiber, Greenlight (NC), LUS Fiber, Public Policy & Gov't, Rural Broadband, Verizon Comments Off on Debunking ALEC, Broadband Edition

Not long ago, the United States led the world in broadband connectivity. Now we are in 16th place, trailing most developed nations. We need broadband policies that connect our homes, schools, and business to the 21st century economy, but we’re pursuing public policies that are putting us in a hole, helping private telecommunications providers and harming the public interest. As the old adage goes, when in a hole, stop digging.

Why is this happening? One reason is that across much of the nation, commercial broadband companies are using their political and economic clout to stifle competition, particularly from municipalities. Individually and through trade groups and the American Legislative Exchange Council (ALEC), the industry is bent on shutting down existing publicly-owned broadband systems and blocking the development of new ones.

ALEC’s argument, detailed in a recent Daily Caller op-ed by John Stephenson, director of its communications and technology task force, is based on distorted and inaccurate claims that would be laughable if they weren’t part of a coordinated strategy to radically transform policy state-by-state.

Stephenson suggests that Chattanooga, one of several cities cited in his piece, made a poor decision in building the nation’s most advanced citywide broadband network – one that has helped companies create literally thousands of new jobs in recent years. In fact, contrary to Stephenson’s claims that municipal broadband drive up property taxes and depresses municipal credit ratings, S&P just upgraded the Chattanooga public utility’s bond rating, stating, “The system is providing reliable information to the electric utility on outages, losses and usage, which helps reduce the electric system’s costs.”

The larger point is that those who want to revoke local decision-making authority for broadband often justify their position by insisting that they want to protect taxpayers from mythical threats. The only impact Chattanooga’s system has had on taxpayers has been to create more jobs, lower electricity bills, and enhance choices in the market. Indeed, Chattanooga’s EPB Fiber service is saving the public money. After a recent storm knocked utility customers offline, EPB’s fiber-optic Smart Grid brought those uses back online more quickly, saving the public an estimated $1.4 million in repair costs.

It’s no surprise that such nonsense emanates from ALEC, which acts as a clearinghouse for corporately-sponsored model legislation that puts corporate profits ahead of the public interest and often public safety. ALEC is backed by some America’s biggest telecommunications firms, including Comcast, Verizon, and Time Warner Cable. Through ALEC task forces, corporations craft model bills and find compliant legislators to introduce them as if they were the legislator’s own. As Common Cause and its allies have documented, ALEC’s influence is pervasive: from privatizing education to limiting voting rights with restrictive Voter ID bills, and endangering public safety with “Stand Your Ground” gun laws, no aspect of public policy goes untouched.

ALEC’s attack on local decision-making authority is consistent with its efforts to benefit big companies like Time Warner Cable and AT&T that want to restrict choices for residents and businesses. So far, the big cable companies have all but crushed competition in the private sector and have been attempting to stop communities themselves from building the essential infrastructure in which these companies have been slow to invest.

But the arguments used to revoke local authority are based on misleading or outright false claims. Stephenson even tries to scare readers, claiming (with no proof) that Marietta, Ga. lost $24 million on a municipal network. What actually happened was documented in a report from 2005. Marietta had a wholesale-only network using a far different business model than the one followed by most publicly owned broadband systems.  It was on a path to operate in the black when it was privatized for ideological reasons. Stephenson’s $24 million loss figure ignores all the revenues it generated as well as additional spillover benefits. That’s fuzzy math.

Stephenson’s claim that LUS Fiber lost money every day last year preys on reader ignorance of telecom business models. Any high-capital investment could be said to lose money “every day” in the early years. Long term investments take time to break even – after which, they make money “every day.” Verizon’s FiOS “lost” money every day for many years but is regarded by many as a smart long term investment.

Publicly owned networks overwhelmingly help public safety, schools, libraries and other community anchor institutions. While AT&T has been caught ripping off taxpayers by overcharging schools for their connections, Lafayette, LA. dramatically increased the capacity of school and library broadband connections at nearly the same price AT&T charged for far lower quality services. Lafayette’s network is one of the most advanced in the nation and has attracted hundreds of new jobs while saving millions for the community by keeping prices lower, as documented in our report Broadband at the Speed of Light. In response to Lafayette’s investment, Cox Cable prioritized that community for its upgraded cable network – compounding local benefits.

Lafayette isn’t alone – consider rural Chanute, KN., which connected its schools and the local community college with a gigabit wide area network at only $250 per location per month. The city’s municipal fiber network has helped preserve jobs that were at risk of leaving because the cable and telephone company were not meeting the needs of local businesses. Additionally, the network pays a franchise fee to the general fund every year.

And then there’s Wilson, N.C. Stephenson claims its fiber-optic network might be obsolete before it is paid off – a ludicrous scenario given the strong consensus the fiber-optic is and will remain the gold standard in networking for decades. Regardless, the network is generating benefits today – lower prices for consumers and the best connection available for the hospital and schools. Oh, and their network is operating in the black also.

These benefits are some of the reasons that the FCC’s National Broadband Plan called on Congress to ensure that all local governments could build networks. No one has suggested that every government should do so – but it should be a local choice, and that is what ALEC has been trying to remove. Largely thanks to ALEC, 19 states limit local authority to build networks. Rather than foster competition and innovation, these policies introduce new barriers to connectivity and deny choice to consumers. It is beyond time to remove these restrictions and let local communities decide for themselves if a network is a smart public investment given their unique situation.

This piece courtesy of the Common Cause Blog. The article was coauthored by Christopher Mitchell from the Institute for Local Self-Reliance. He directs their Telecommunications as Commons Initiative. He is also editor of http://www.muninetworks.org/. Follow him @communitynets. 

Beleaguered Burlington Telecom Making a Comeback with 1Gbps Broadband: $149/Month

Phillip Dampier November 5, 2012 Broadband Speed, Burlington Telecom, Comcast/Xfinity, Community Networks, Competition, Consumer News, Editorial & Site News, Public Policy & Gov't 2 Comments

Burlington Telecom, the troubled publicly-owned fiber broadband network for Burlington, Vt., is working on a comeback by finally boosting its speeds well beyond what competitors FairPoint Communications and Comcast can offer residential broadband subscribers.

BT will offer residents 40/40Mbps service for $99.99 per month and 1,000/1,000Mbps service for just $50 more per month (with a 12-month contract), starting Dec. 1:

Stop the Cap! previously recommended BT consider offering faster speed packages that give subscribers a compelling reason to switch from Comcast or FairPoint. Community broadband providers with fiber optic networks need to leverage those superior networks to drive new customers to sign up, and BT certainly could use a influx of new business as it fights through its financial problems.

We strongly recommend BT consider boosting its 40/40Mbps offering to at least 100/100Mbps at the $100 price point to better compete with Comcast’s Extreme 105 tier, which offers 105/20Mbps for just $15 more per month. Pricing and speeds must be comparable with the cable competition to compel a customer to go through the hassle of changing providers, and most subscribers still don’t value higher upload speeds as much as download speeds.

BT’s gigabit offering succeeds on all counts, but it is unlikely to draw a large percentage of customers willing to pay $150 a month for residential Internet service.

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