Richardson County, Nebraska

Richardson County, Nebraska is classic rural Americana.  Fixed at the very southeastern tip of Nebraska, the county’s gently rolling countryside offers a break from the relentless flat prairies in nearby Kansas. Agriculture, cattle and hog farming are important to the local economy.  Large farms grow corn, alfalfa, and wheat, but the area’s 170 growing days also support a significant apple crop as well. Towns within the county range from the tiny Barada, population 28 up to the county seat — Falls City, population 4,671.

With a climate than can deliver temperatures well under zero in the winter and into the triple digits in the summer, tourism isn’t this part of Nebraska’s strength.  But its location, culture, and cost of living are for those who live there.

Originally founded in 1857, Falls City served as a major transit point for escaping slaves caught up in the Kansas-Nebraska Act controversy, one of the many disputes that eventually led to the Civil War.  Like most small towns of the time, growth came with the arrival of the railroads.  First, the Atchison & Nebraska Railroad in 1871 and then the Missouri Pacific in 1882.

The population peaked in 1950 at 6,200, but the town has held its own thanks to the self-sufficiency of its residents and local government.

Falls City is a unique community among thousands of small communities across the heartland and beyond.

The local economic development team promote Falls City’s possibilities as a strategic transit and shipping center.  Regionally, Richardson County is just an hour or two away from Kansas City, Missouri, Topeka, Kansas, and Omaha and Lincoln, Nebraska.  Centrally located, the area offers two day shipping possibilities to most points of the country.

The municipal government owns and operates the local water, gas, electric and waste treatment facilities, which charge rates lower than other communities in Nebraska.  Time Warner Cable’s Nebraska division offers service in most parts of town, and the local, family-owned Southeast Nebraska Communications (SNC) started providing phone service in Falls City, Rulo, Stella, Shubert, Verdon and Salem, as early as 1906.

SNC, which was founded by Edwin H. Towle, began with an attitude of innovation — providing the best, most modern service possible for southeastern Nebraska.  Simply providing “good enough for rural residents” service typical among larger providers was never a part of the company’s philosophy.  The company grew through its innovation, and today leverages all it can out of its copper cable network.  The spirit of innovation that began with Edwin continues today at SNC through family member Dorothy J. Towle, who serves as president of the company.

Towle and other company officials recognize the days of copper wire phone networks remaining relevant in today’s telecommunications marketplace are seriously numbered.

SNC made a decision remarkable for a phone company of its size — it was going to rewire Falls City for fiber optics, straight to the home, at no additional charge to residents and area businesses.

Last July, it stunned the community with the news southeastern Nebraska would have access at speeds cities ten times larger could only dream about.

SNC is investing between $8-10 million in the project, which will reach most city residents by its completion in 2011.  The company is constructing the network with capital improvement funds they’ve conservatively saved year after year, and believes it’s a great investment because of future revenue possibilities fiber optics can bring.  This isn’t a company that worries about pumping up stock prices, boosting dividend payouts, or lavishing executives with enormous pay and benefit packages.  SNC employees live and work in the community and want to enjoy the fruits of their labor.

Operations Manager Ray Joy told the Journal Star the new system will be capable of offering 1,000Mbps to a house.  Right now, SNC offers DSL service at 3-7Mbps.

The company is still working out precisely what speeds it will offer residential and business customers, but they will be far better than what is possible from aging copper wiring.  Best of all, it’s future proof, which SNC believes will save them plenty in the long run.  Upgrading fiber networks just takes a different type of laser — no rewiring required.

SNC first considered wireless technology to serve the community, but rejected it because of insufficient bandwidth capacity.  Fiber’s expandability the choice much easier for the company.

Of the 460 cities and villages in Nebraska, only 11 currently have fiber to the home, and Falls City will be the largest in the state.

Falls City Economic Development and Growth Enterprise, the local economic development team, hopes to promote Falls City’s fiber as perfect for new digital economy businesses, creating new high-paying jobs for area residents.

Current entrepreneurs who live in Falls City are already convinced.

SNC's Management and Employees

Karissa Watson, owner of Kissa’s Kreations, a Web and graphic design service, told the newspaper she is looking forward to the conversion.

“From what I understand, it will be 20 times faster, but I also think the quality will be better because it’s a dedicated versus a shared service,” she said.

Watson wants faster service in order to increase her efficiency.  Slower broadband speeds can cause long waits for businesses moving data back and forth.

Watson and other Falls City residents are being kept informed about the progress of the project in quarterly newsletters sent by the company.  A contracting firm, RVW, Inc. of Columbus, Nebraska is doing the work.  Their technicians are personally visiting every home and business owner before digging begins in a neighborhood, and remain available to address any concerns residents have after work is complete.

SNC markets themselves as locally owned and operated, which is why personal contact with customers is critically important to the company’s success.  Newsletters allude to their nearest competitor, Time Warner Cable, as not exactly being local.  SNC touts their local customer care office, staffed by area residents, local call centers that are answered by “real people,” and a service staff that can often respond to service outages on the same day.

“Unlike some companies, we don’t play games with low teaser rates that go up later,” sums up the company’s marketing attitude.

SNC’s fiber upgrade also could eventually protect them from Time Warner Cable’s relentless drive towards product bundling, which can cost the telephone company landline business.  The cable company can also beat SNC’s broadband speeds on the copper wire network.  With an upgrade, SNC could eventually offer customers a cable-TV alternative, taking the competition back to the nation’s second largest cable operator.

Although 75 percent of the six million Americans served by fiber-to-the-home projects are Verizon FiOS customers, there is considerable growth in fiber deployment among small mom and pop and municipally-owned phone companies.  That’s remarkable because they lack the economy of scale and financial resources larger telephone companies enjoy.  But those small phone companies aren’t caught up in debt, endless mergers and acquisitions, stock price games, and ludicrous compensation for a handful of executives.  For customers of Qwest, Frontier, Windstream, and CenturyLink, fiber remains an elusive dream.

The Journal Star covered several other phone companies with fiber projects in Nebraska:

Cambridge, in southwest Nebraska, also has FTTH technology to serve a population of just more than 1,000.

“We’re very excited,” said Cambridge Economic Development Director Adela Taylor, who called it the “infrastructure of the future.”

She said the fiber optic system was the initiative of the local telephone company, which has been very pro-active over the years in bringing the newest technology to the town. She noted that Cambridge was one of the first towns to have Internet service back in 1993, as a pilot project.

Three River Telco in Lynch is in the midst of a three-year project to install FTTH technology. The company serves about 1, 250 customers in Lynch, Verdel, Springview, Johnstown and Naper in north-central Nebraska.

General Manager Neil Classen said Three River received a $19 million federal loan from the Rural Utilities Service to replace its copper wire system with fiber optics. The company wanted to provide the latest services to customers, including transmitting television signals via Internet protocols.

Classen said the fiber optic system will provide customers with a more reliable communications system and a lot more bandwidth than the existing copper wire network. He said the price tag could be less because fiber optic technology has improved and become more cost-effective.

Fiber dreams are Gone With the Windstream

Windstream serves several Nebraska communities, and for those customers, the news is less exciting.  Windstream has limited itself to installing small amounts of fiber in new subdivisions.

Brad Hedrick, Windstream vice president of operations for Nebraska and Missouri, said installing fiber optics is an extremely expensive proposition and Windstream has no plans to connect every home and business as Falls City is doing.

But he told the newspaper if the federal government wants to kick in federal funds to help small communities convert, Windstream will consider it.

Windstream cannot deliver fiber to the home to their customers, despite $2.997 billion in revenues for 2009.  But a family-owned phone company in Falls City, a telephone company in Cambridge serving 1,000 residents, and Three River Telco in Lynch all can.

For those around in the 1980s, Verizon Wireless’ latest 3G ad slam against AT&T should have brought back some memories.

Someone at Verizon probably spent some time reviewing advertising collections of the 1970s and 1980s and ran across Big Red, the cinnamon-flavored gum with the long-lasting flavor.  First appearing back in 1976, the gum really took off in the early 1980s when the William Wrigley Jr. Company commissioned a catchy jingle for its advertising campaigns.  It stuck, and most still remember it to this day.

Verizon, which bathes its corporate image in red, made the connection, and managed to recreate most of the imagery of several Big Red commercials, mostly from the early 1980s, albeit with updated lyrics.  They certainly got the classic corporate 1980s Reagan-era jingle sound down pat.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Verizon Big Red.flv[/flv]

For those too young to remember Big Red gum, I’ve brought one of the original advertisements together with Verizon’s reproduction so you can appreciate the scope of their recreation.  Verizon actually borrowed from several Big Red ads, but you’ll get the point.  Too bad it’s the gum priced at 25 cents and not the 3G.  With the gum, you could have any many sticks as you wanted — no chewing limits either. (1 minute)

Strauss

This week Federal Communications Commission chairman Julius Genachowski appointed Karen Peltz Strauss Consumer and Governmental Affairs Bureau Deputy Chief.

Strauss is supposed to focus on disability issues, among other things, and will help the Commission to implement the components of the National Broadband Plan that address access for people with disabilities, including leading the effort to develop a proposed Accessibility and Innovation Forum.

“The FCC has a vital role to play in empowering and protecting all consumers and ensuring they have access to world-class communications networks and technologies” said Chairman Genachowski. “I look forward to drawing on Karen’s extensive experience with telecommunications access issues to realize those goals.”

A news release from the FCC includes a brief review of her 25 years’ experience working on telecommunications access for people with disabilities.

But the agency forgot to mention Strauss also serves on the board of directors of an industry front group — the Alliance for Public Technology.  APT claims it represents the best interests of consumers, but considering who is writing the checks, that’s highly doubtful.

APT’s website suggests the group “makes policy decisions based on the potential benefit to consumers. The Board members themselves as well as APT’s member organizations serve the education, health care, social service and economic development needs of senior citizens, people with disabilities, minorities, children, low income families, rural communities, and all consumers.”

That’s true, if you, as a consumer, are for big telecom mergers like AT&T and BellSouth, which APT supported, oppose Net Neutrality, which APT feels should not be imposed on providers, liked the idea of Cingular being absorbed into AT&T’s empire of wireless, which APT also supported, and so on.

In fact, this group even praised Verizon’s willingness to invest in West Virginia:

Verizon has demonstrated a commitment to increased investment in advanced telecommunications capabilities. According to the company, Verizon invested almost $560 million in its Maryland network and $150 million in West Virginia in 2001 (2002 figures not available). Verizon added more than 31,000 miles of fiber optic cable in Maryland and 20,500 miles of fiber optic cable in West Virginia. Over 2.5 million access lines in Maryland now have access to DSL. Authorization to provide in-region long distance service in Virginia will facilitate Verizon’s capacity to build on economies of scale and scope in order to provide a high standard of service and accelerated deployment of advanced technologies to the consumers of Maryland, Washington, D.C., and West Virginia.

The only thing Verizon wants to accelerate in West Virginia is their exit.

Laughably, one of the reasons APT supports AT&T so much (besides the big checks the company writes to fund their operation) is:

With BellSouth’s entry into the Florida and Tennessee long-distance markets, AT&T began to offer 30 minutes of free long distances to its customers and inserted “thank you” messages into the time between a customer dials a number and the connection occurs. These actions demonstrate tangible benefits for consumers because of an increased number of competitors in the long distance market.

I know that makes me feel warm all over.  Who should I call first?

Wading through APT’s public policy positions unearths absolutely no surprises.  They exist to advocate for the interests of the companies that fund their operations, and that includes all the bully boys:

• AT&T
• CTIA
• Embarq
• Qwest
• United States Telecom Association
• Verizon

Despite this, APT writes with a straight face, “These companies give donations based on a shared vision for the ubiquitous deployment of high-speed telecommunications technology, but have no say in the governance of the association.”

Sure they don’t.  But then again, those checks would stop coming if APT began actually representing the consumers they claim to care so much about.

It’s disappointing the FCC would want someone so closely aligned with the interests of large telecommunications companies working to implement a National Broadband Plan that is supposed to represent the public interest.

It’s just another example of the Inside the Beltway Tickle Party, where lobbyists and “dollar a holler” experts flow between government jobs, privately-funded think tanks, and the private sector.  Consumers are only too aware that their best interests are not represented by employees whose loyalties change depending on what hat they wear to the office.

In addition to our ongoing concerns about Internet Overcharging schemes like usage allowances and caps, Stop the Cap! is a strong advocate for Net Neutrality protection.  As part of yesterday’s unveiling of the Federal Communications Commission’s National Broadband Plan, FCC Chairman Julius Genachowski spent 30 minutes answering questions from CitizenTube participants about broadband policy.

Among the 18 questions asked was one from yours truly, taking on broadband industry lobbyists who make evidence-free claims that Net Neutrality will somehow kill investment in broadband expansion.

Pointedly, I pressed Chairman Genachowski about whether we had to sacrifice the Internet’s openness in order to bring broadband service to the presently unserved.  We sure don’t think so.

Based on the answer, which appears about 24 minutes into the video, he doesn’t think so either.

The false argument providers make to scare legislators is little more than hollow rhetoric, especially when you accept their claim they are not engaged in the kinds of activities today that Net Neutrality would ban tomorrow.  How exactly does prohibiting what providers claim they are not doing anyway harm investment?

Answer: it doesn’t.

What it harms are further efforts to monetize broadband from every angle in an effort to further fatten already engorged profits.

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Dampier

Yesterday, the Federal Communications Commission formally introduced its omnibus National Broadband Plan to America, Congress, and the telecommunications industry.  The FCC seeks nothing less that a transformation of broadband to better meet the needs of Americans for years to come.

The 376-page plan recognizes broadband is no longer a novelty.  It’s now becoming one of the essential utilities of life — joining power, telephone and water service as something virtually every American will eventually have in their home.  But while the Commission lays the general groundwork for future regulatory policy to help achieve that goal, it ignores the historical reality that made universal service for utilities possible.

I am a strong believer in reviewing past mistakes to avoid repeating them in the future.  That is why Stop the Cap! occasionally turns back the clock and reviews history.  Railroad robber barons, telephone company monopolies, and electric service providers all abused their positions and consumers paid through the nose for service until the government finally broke up the anti-competitive trusts that limited competition.

Just like today’s broadband players, in the early 20th century, electric companies asked for and received favorable treatment by Congress.  The industry argued such treatment was required to make investors comfortable with the enormous amount of investment required to construct power generation facilities, run wiring to homes, and obtaining easy access to American streets and backyards.  Regulations must be kept to a bare minimum, providers demanded.  Anything else, they claimed, would discourage critical private investment, would create job losses, and slow deployment of service to millions of Americans.  Sound familiar?

By the time the American public realized electric companies were abusing their monopoly positions to charge outrageously high prices, the half-measures legislators proposed to control rates and improve service were often ineffective.

Just as with electric service, any broadband plan that seeks to tinker around the edges of the problem will not solve the problem.  Providers will find loopholes, lobbyists to help water down the provisions they dislike, and lawyers to mount endless legal challenges to stall reform.

The warning signs are already apparent in the FCC plan.  The agency seeks to cooperate with some of the biggest players in the industry that are responsible for what the FCC calls “the critical problems that slow the progress of availability, adoption and utilization of broadband.”

That ultimately means working with existing providers instead of creating the right conditions to welcome new players into the market.

America's broadband duopoly - just four percent of Americans have more than two providers to choose from

The anti-competitive, de facto duopoly pricing power available to cable and telephone companies has created an enormous digital divide for rural Americans who cannot pass “Return on Investment” means tests, prices broadband service out of reach for many, and seeks even higher pricing while proposing to limit service with Internet Overcharging schemes like “usage-based billing” and “usage limits.”

Where one lives is often the most important factor when considering broadband speed and service quality.  It’s the luck of the draw.  A customer on one side of the street may have the option of Verizon FiOS, a true fiber-to-the-home service providing equal upstream and downstream speeds far higher than the national average.  Across the street, a customer may only be served by another telephone company offering 1Mbps DSL with no alternatives.

Other Americans live within viewing distance of a utility pole where cable or telephone broadband service stops, giving them the choice of paying $10,000 to extend service, or living with dial-up or satellite fraudband.

Few phone or cable companies will ever consider invading another’s turf, even if customers begged.

But it gets worse.

The service customers can obtain from a provider varies even within its service area.  Verizon FiOS and AT&T U-verse is available in some neighborhoods, but not others.  What stops or slows service expansion?  Anything from a management decision on a whim to concerns by private investors, market conditions, cost controls, or changing revenue expectations that inhibit uniform service across the community.  Local governments used to manage this problem with franchise agreements that made approval conditional on supplying service across an entire community, but companies like AT&T lobbied their way to statewide franchising reforms that can eliminate local oversight.

The cable television industry has a better track record of providing uniform broadband service to customers in their respective service areas, but at what cost?  Time Warner Cable COO Landel Hobbs recently told a group of investors pricing for its Road Runner service can be increased at the company’s whim.  Comcast has already increased prices on its broadband service. Both companies have either tested or implemented usage limits and restrictions on their customers.

What makes these things possible?  Limited competition and insufficient oversight.

The FCC’s solution to limited competition includes vastly expanding wireless frequencies available to mobile broadband providers.  But here’s the problem.  The government will auction those frequencies off to the highest bidders, which are most assuredly the dominant industry players AT&T and Verizon.  For millions of Americans, that means no extra competition at all because their phone, broadband, video, and wireless service all come from these two companies.  The only way smaller players can compete in a bidding war is through consolidating mergers, which reduce the number of competitive choices in many cities.  If the government wants competition, it should provide incentives to spur its development.

Wall Street certainly won’t help much.  They loathe heavily competitive markets now, because inevitable price wars limit their returns.  Getting initial investment to construct new networks is problematic because investors don’t want excessive competition.  Providers howl it’s unfair for government to help their competitors, but their incumbency provides them with built-in benefits unavailable to new entrants.

The FCC recognizes the importance of broadband service as America’s next utility, but is afraid to regulate them as such.  They may have good reason not to try.  Comcast is presently suing the Commission in federal court, claiming they don’t have jurisdiction over broadband policy.  Should Comcast prove its case, the National Broadband Plan could be just another thesis for improved broadband, with no backing authority to implement its recommendations and regulatory changes.

That brings us to Congress.  While the FCC may bring its best intentions to the table with the National Broadband Plan, it’s very likely lobbying will force changes to what finally gets implemented, if anything.

The telecommunications industry never has a problem finding financial resources to hire lobbyists and spread lavish campaign contributions all over Washington.

They’ve already bought and paid for an enormous astroturf group called Broadband for America with 200 member organizations, virtually every single one backed by AT&T or Verizon money or personnel, or equipment providers who stand to earn substantially from broadband improvement.  They are running TV ads telling viewers private providers should be left alone to get the job done, something they’ve had a decade to accomplish with insufficient progress in key areas.

Many in Congress, especially on the Republican side of the aisle, will agree with BfA’s “hands-off” advocacy.  Early reaction from Republicans regarding the Broadband Plan is not favorable.  Rep. Cliff Stearns (R-Florida), the ranking Republican on the House Energy and Commerce communications, technology and the Internet subcommittee, told the Washington Post he wants the agency to stay focused on bringing access to people who don’t have it.

“I am concerned, however, that the plan may contain stalking horses for investment-killing ideas, such as so-called net neutrality mandates or a return to outdated, monopoly-era regulation,” he said.

Many Democrats with large telecommunications companies headquartered in or near their districts are likely also to advocate caution.

Regardless of what the FCC recommends, Congress will ultimately control the outcome.

Here are our recommendations you should consider sharing with your elected officials:

Congress and the FCC must be willing to stand up to the telecommunications industry which is not delivering world-class broadband service.  The United States is falling behind in access, pricing, and speed.  Simply accepting the provider argument that they should be left alone in an unregulated, duopoly marketplace is not an option;

Congress must deliver to the FCC clear authority to regulate broadband service and enforce Net Neutrality.  Recent court cases argue the Commission presently lacks that authority.  Congress should take every possible step to ensure the courts this isn’t the case.

Increased oversight of the broadband industry is essential.  Why does an industry making billions in profits need to consider usage limits and usage-based billing designed to deter residential use of broadband service?  Such limits are designed to protect cable-TV revenue that could disappear if Americans dump their television channel packages in favor of watching everything online on their existing broadband account.

Congress should not stand for an unregulated duopoly controlling a service that is becoming as essential as water, energy, and the telephone.  As broadband becomes an essential utility, why is the government not stepping in when the COO of the nation’s second largest cable company — Time Warner Cable, tells investors he can raise broadband prices on a whim?  Is this the 21st century version of the Robber Baron Era?  Robust competition guarantees no executive can make such a statement.  Congress must act to bolster competition, including financial and tax savings incentives for new providers willing to enter markets of all sizes;

Wireless mobile broadband spectrum auctions do not promote competition because the biggest incumbent players are sure to win the bulk of the frequencies, guaranteeing more of the same anemic competition.  Some of the newly available blocks of frequencies should be reserved for bidders who do not currently serve the market where those frequencies are available.  Only that guarantees new competition in wireless;

Free or deeply discounted access to basic Internet service at broadband speeds should be a part of any National Broadband Plan, to ensure access to every American who wants it.