For the first time, a state has announced it is returning stimulus funding made available by the Obama Administration to improve broadband service.

Wisconsin governor Scott Walker said thanks, but no thanks to the U.S. Department of Congress, returning $23 million in broadband stimulus funds allocated to build a fiber-optic “middle mile” network to 380 Wisconsin communities — including 385 libraries. 82 schools, and numerous public safety offices in rural areas.

The decision to reject the money came in concert with a public relations push by Republicans in Washington this week calling on governors to curtail “wasteful spending” and reject stimulus projects.  Walker’s timing of the rejection has political watchers suspicious of an orchestrated campaign by state and national Republicans to call out the president’s economic programs.  Critics of the Walker administration are also accusing the governor of doing AT&T’s bidding in rejecting the public money.

AT&T has plenty of good friends in the state government, which has historically granted most of AT&T’s legislative checklist in the past ten years.  Wisconsin has taken a “hands-off” approach to cable and phone companies.  Statewide video franchising makes AT&T’s efforts to expand its U-verse IPTV system easy, without having to answer to local communities.  Rural commitments to landline phone service have also been eased for AT&T, thanks to a large lobbying effort.  Publicly-owned municipal broadband networks open to ordinary consumers are few and far between in the state, thanks to heavy opposition from the phone giant.

Walker’s track record of being extremely pro-business, and the fact he accepted more than $20,000 in campaign contributions from AT&T made it easy to claim Walker was delivering another favor to the state’s largest phone company.

But is Walker’s rejection of the state’s broadband stimulus money a help or a hindrance to AT&T?  Is Wisconsin’s governor correct when he says federal government bureaucracy was at fault?

Stop the Cap! decided to investigate.

BadgerNet: An Introduction

Governor Walker

Wisconsin’s institutional broadband network, which delivers broadband connections to large educational facilities, public libraries, and government users, is named BadgerNet — which makes perfect sense for the Badger State.  State law limits who can utilize the service — ordinary residential customers cannot — so the network is not well known outside of the circle of groups authorized to access it.

Currently BadgerNet largely exists as an extension of AT&T’s network in Wisconsin.  That is a critical point.  Had BadgerNet initially been created as an independent entity, today’s stimulus rejection might never have happened.  Wisconsin, no doubt at the behest of AT&T, built its network with a leasing arrangement, signing five-year term contracts to rent space on AT&T’s fiber-copper wire facilities.  That kept initial construction costs down, and allows the state to theoretically “walk away” from part of the network if something better comes along — a highly unlikely proposition in a state like Wisconsin.  It’s not an economic leader and has large numbers of rural counties competitors would be unlikely to serve.

Wisconsin Republicans call this arrangement with AT&T a “public-private partnership.”  Democrats call it a giveaway to AT&T, and BadgerNet officials call it one big fat headache.

Wisconsin's BadgerNet

Obama’s Broadband Stimulus

President Obama

When the Obama Administration unveiled its broadband stimulus program, it not only promised to deliver new broadband projects, but also the employment prospects for an army of consultants hired to navigate through the terms and conditions that always accompany money from Washington.

The control measures established by the Department of Commerce, which administers the money from the federal government, are designed to protect against waste, fraud, and abuse.  Unfortunately, they are often more impenetrable than software licensing agreements.  If you want the money, you must follow every requirement, or risk forfeiting it back to the government.

Wisconsin’s proposal to expand BadgerNet with broadband stimulus funding would mean discarding slower speed data connections for super-fast fiber optics.  Some 203 new miles of optical fiber were to be laid, serving 385 school districts, 74 libraries, and eight community colleges.

The federal government liked what it saw and awarded nearly $24 million in funds to launch the “middle-mile” project.  Along with the virtual check came pages of fine print — rules about how the money could and could not be spent.

As state officials and BadgerNet 2.0’s planners poured over the documents, they began reaching for the Tylenol.  AT&T’s ownership interests in the existing network turned out to be a major problem.

The ‘AT&T Problem’

“We, as a state, do not own our network. We purchase a managed service through the BadgerNet contract,” Diane Kohn, acting administrator for the Division of Enterprise Technology in the Department of Administration told the Milwaukee Journal Sentinel.

Most grant recipients either plan to build a new network from the ground up or build on an existing non-profit network.  Neither is the case in Wisconsin because of AT&T’s involvement.

“From a federal perspective, it was like we were some kind of unknown start-up firm with all of these risks attached to it,” said Robert Bocher, an information technology consultant for the Department of Public Instruction. “In fact, our network has been around since the mid-1990s.”

But it got even more difficult when BadgerNet discovered the federal government requires new fiber networks built with stimulus funds to be utilized for at least 20 years.  This important control measure protects taxpayers from fronting the costs to build state of the art fiber networks, only to be later sold off to private interests or discarded as a budget cutting move.

Wisconsin’s agreement with AT&T runs for five years, not 20.  Additionally, since AT&T largely administers the infrastructure, much of the $23 million could have ended up going straight to AT&T to cover construction costs.  BadgerNet lacks sufficient funding to completely sever ties with AT&T and build its own network, and Gov. Walker isn’t about the deliver the money required to start a new network from scratch.

BadgerNet learned a lesson most grant recipients discover after winning the money — spending it comes with plenty of wires attached, and none of them transport data.

The Davis-Bacon Act

A Depression-era law is also being blamed for supposedly creating major hurdles for broadband network construction.  The 1931 Davis-Bacon Act was enacted to require public works projects be built at local prevailing wages.  The Act became law after contractors began importing cheap labor (typically underpaid African-Americans from southern states) to work competitively bid public construction projects during the Roosevelt Administration.

Mikonowicz

Republicans currently suspect the Act of being little more than a union protection law, raising labor costs artificially and helping to bust budgets.  Wisconsin Republican senator Ron Johnson used complications in a Sauk County broadband project to bash the Act, accusing it of being responsible for wasting taxpayer dollars.

David Mikonowicz, the utility superintendent for Reedsburg, complained the Act would require him to pay more than double his anticipated labor costs for a fiber project in the community.  Mikonowicz claimed the Act didn’t provide a prevailing wage for fiber contractors, so he was forced to bid out the project at wages suitable for high voltage wiring projects — $40 an hour.

That false premise made it to the pages of the Journal Sentinel in an earlier piece — a bit of political theater to bash unions, the federal government, and play up local communities as the innocent victims of both.

Stop the Cap! had no problems finding a prevailing Davis-Bacon Act wage covering Sauk County fiber installers, so we are unsure why Mikonowicz could not:

Teledata System Installer/Technician $11.70-21.26/hr

Low voltage construction, installation, maintenance and removal of teledata facilities (voice, data, and video) including outside plant, telephone and data inside wire, interconnect, terminal equipment, central offices, PABX, fiber optic cable and equipment, micro waves, V-SAT, bypass, CATV, WAN (wide area networks), LAN (local area networks), and ISDN (integrated systems digital network)

The Loyal Opposition & Everyone Else

The loss of nearly two dozen million dollars in federal government money was catnip for the loyal opposition.

Rep. Pocan

State Rep. Mark Pocan (D-Madison) said Walker’s broadband money giveback was hurting the state.

“Not only is he turning away construction jobs that would have come with the federal grant to expand broadband fiber to schools and libraries across Wisconsin, but he’s closing off potential to business growth that comes with bridging the digital divide,” Pocan said. “What’s worse, the root of his decision wasn’t what was in the best interest of Wisconsin, rather the best interest of his big telecommunications campaign donors.”

Gov. Walker used the occasion to blame the federal government for unnecessary bureaucracy. Mike Huebsch, appointed by the governor to serve as secretary of the state Department of Administration, issued a memo warning if they didn’t return the money, state taxpayers could be on the hook for the entire amount if the federal government found the state didn’t comply with grant requirements.

Ordinary Wisconsin residents would never see improved broadband in their homes from the middle mile project, so much of their reaction comes from a reflexive dislike of the governor, taxes and spending, AT&T, or a combination of all three.

AT&T has kept quiet through the entire affair, only stating it wasn’t interested in becoming a formal grant recipient stuck with the federal government’s rules.

Republicans and “tea party” members are thrilled Wisconsin is a leader in throwing federal money for broadband, railways, and other public works projects back to Washington, in hopes it will set an example for the federal government to follow.

What Happens Next

The state says it is negotiating an extension of the existing AT&T contract for another five years, and points to advances in copper wire-delivered bandwidth and the fact AT&T already provides fiber connectivity for certain parts of BadgerNet.

While AT&T has been labeled the ultimate culprit for the broadband stimulus debacle, it’s not as guilty as some might think for these reasons:

1. The initial failure of the state to own and operate its own network, instead of leasing access from AT&T;
2. AT&T gets the money whether Wisconsin leases another five years of service from AT&T, or stimulus funding gets diverted to AT&T to bolster BadgerNet’s existing network;
3. AT&T is sitting pretty whether it has a five year lease or a 20-year stimulus-mandated contract.  In fact, AT&T could set its rates at today’s relatively high prices for network connectivity that Wisconsin would still be paying two decades from now.

That doesn’t mean AT&T is a good actor in Wisconsin.  While the company has steered clear of this debate, its lobbyists continue to fight off any potential competition from community-owned networks that threaten to deliver service to residential and business customers.  Few Big Telecom providers complain about institutional networks like BadgerNet, because heavy lobbying on their part several years ago won state laws that forever prohibit ordinary consumers from ever buying service from them.

Time Warner Cable’s TV Everywhere authentication system went live today for customers, who can now access several channels of ESPN on their broadband connection, assuming they can prove they subscribe to a video package that includes ESPN.

Time Warner’s agreement with Disney-ABC, which owns ESPN, made online viewing possible for Time Warner Cable subscribers.  Viewers can authenticate themselves by visiting ESPN’s website and invoking the live video player, which will connect with Time Warner Cable’s MyServices website.  Just log in and Time Warner will send authorization to ESPN to unlock the video streams to watch.  There is no additional charge for this service.

Earlier, there was some confusion over whether broadband-only customers could have access.  A message on ESPN’s website indicates the answer is no — you must be a Time Warner Cable customer with at least Standard Service to get authenticated.

Unfortunately, once logged in and watching, the results were underwhelming, at least for ESPN3.  The picture quality from Stop the Cap!‘s Brighton, N.Y., headquarters was dreadful, even from a Road Runner Turbo account.  A “signal strength meter” barely moved into second position about five minutes after I started watching.

Results were much better for ESPN’s primary channel feed, currently showing a football game between the New York Giants and the Dallas Cowboys.  That managed to peg the meter one position from maximum.  On a 28″ LCD monitor, the picture looked reasonably good, but frankly not as impressive as either Netflix streaming or Hulu.  Pixel problems and other video artifacts were far too common.  But for on-the-go-viewing, the results were adequate.

Commercial breaks were replaced with either ESPN’s logo or, in the case of the football game, short ad spots for NFL gear.  Watching a slowly moving logo for two plus minutes in uncomfortable silence, especially with a group, can be unnerving enough to actually prefer the commercials.

The results for ESPN3, "powered by Time Warner Cable" were unimpressive, with a "signal strength" meter showing just a single bar on our 15/1Mbps Road Runner service.

Things looked better on ESPN's primary network, which managed to peg the signal strength meter to one position below maximum.

When Midwest Publishing couldn't get their AT&T Internet service restored, a business neighbor allowed the company to run a cable next door and borrow theirs.

AT&T likes to think of broadband as a tool towards economic recovery, but too often service problems end up hurting small businesses.

Ask Pat Boll, business manager of Midwest Publishing.  When his company’s AT&T business broadband connection suddenly stopped working last week, much of the business activity at the company stopped with it.  Midwest Publishing, like many small businesses, depends on the Internet to conduct business, take orders, and assist customers.

Boll spent three days trying to get answers from AT&T customer service, but only managed to learn the reason why the company’s Internet service stopped working: AT&T claimed a disconnect order entered into their systems in May was processed… in late August.  That was news to Boll, because they never asked for their service to be shut off.

What was worse is that the mysterious disconnect order remained in AT&T’s computer systems preventing the telecommunications company from re-establishing the service, costing Midwest Publishing thousands in lost business and wasted time.

Like so many stories we’ve covered on Stop the Cap!, Boll turned to local media for help.  He contacted Tulsa TV station KJRH-TV.  Their “2 Works for You Problem Solvers” got in touch with AT&T and managed to do what Boll couldn’t accomplish himself — get AT&T to turn Internet service back on.

Small businesses who depend on the Internet should never have only one provider.  Having a backup service provider can make all the difference in an extended outage.  Many small businesses maintain basic DSL service or even wireless broadband as a backup in case their primary connection stops working.  The expense is well worth it if your business depends on the Internet to stay in business.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/KJRH Tulsa Internet glitch costs small business thousands 9-2-10.flv[/flv]

KJRH-TV in Tulsa shares Pat Boll’s story with Tulsa viewers.  AT&T provides DSL service through much of Oklahoma.  (2 minutes)

Seoul, the capital city of the Republic of Korea

Seoul, the capital of the Republic of Korea, is the world’s most wired city with some 95 percent of residents enthusiastic users of the world’s fastest broadband networks.

While Americans cope with a broadband duopoly that holds us back, the 100Mbps world of broadband has already arrived in Korea, at prices a fraction of what Americans pay for service — with no limits.

A full 95 percent of households in South Korea have broadband internet access – the highest in the world. Singapore is second to South Korea, with broadband connection in 88 percent of homes. The U.S. ranks 20th, with broadband connection in 60 percent of homes.

Although densely populated cities in Korea, where residents live in multi-dwelling units, makes wiring fiber optic broadband easy, that’s not the only reason why South Korea is so far ahead of the United States.

Koreans consider broadband an essential part of life, a representation of their sense of freedom, as well as a tool to help Korea’s development in a global economy.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/ABC News Seoul The World’s Most Wired City 6-25-10.mp4[/flv]

ABC’s ‘Good Morning America’ visited Seoul to learn how the world’s most wired city has been transformed by universal, inexpensive, super-fast broadband.  (5 minutes)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/ABC News Why So Wired South Korea 6-25-10.mp4[/flv]

ABC’s Juju Chang sat down for an interview with Yongmann Park, chairman of Doosan Corporation, one of Korea’s successful business conglomerates.  (2 minutes)

Stop the Cap! reader Bones sends word the FCC needs volunteers to help keep America’s broadband providers honest about their speed claims.  But the agency warns heavily usage capped consumers they probably shouldn’t apply, and anyone consuming over 30 GB per month is disqualified.

The FCC SamKnows Broadband Community aims to gather and report statistical data on the performance of America’s broadband providers.  Thus far, most of the earlier speed results being studied by public officials come from data aggregated from voluntary visits to speed test websites.  But the data is subject to considerable variation depending on the speed test site chosen, traffic and capacity issues that only impact the route to the test site, and what else a consumer may doing with their connection during the test.  Many also conduct speed tests when a technical problem is apparent, using the speed test site to verify their suspicions.

The FCC will send 10,000 volunteers a free router that will hook up to one’s broadband connection and quietly test it several times daily.  Comprehensive measurements to be taken include latency, packet loss, DNS query times and failures, web page loading times, as well as the obligatory suite of speed tests.  The testing is done in the background and the results are uploaded to SamKnows for review.  The FCC can use the data from all of the volunteers to identify the true performance of national and regional Internet Service Providers.  Do their speed claims actually match reality?  Do they suffer from congestion problems and at what times of day?

One group of ISPs the agency will have trouble measuring are those that heavily limit their customers’ use.  In fact, the Test My ISP website warns off customers with low data caps because the project is expected to send and receive about 4 gigabytes of data in full over the course of each month. While the program designers felt that much data was so insignificant it would not create a problem, some greedy ISPs out there beg to differ.  With some providers offering usage allowances at 5 or fewer gigabytes per month, the FCC quickly learned it doesn’t want to be responsible for spiking consumer broadband bills with any overlimit fees.

As a result, they’ve asked those usage capped consumers to think twice about applying for the traditional testing program:

Our units download approximately 2GB per month and upload around 2GB. If you’re on a product with a low usage cap then we’d advise against signing up, or at least informing us beforehand so that we can apply a different testing profile.

The FCC also isn’t interested in sending test units to customers they designate as “heavy downloaders”:

We’d classify anything above 30GB per month as being too heavy for us to gather useful results.

With the increasing use of multimedia content and other high bandwidth applications being released to the Internet masses, we beg to differ with the arbitrary definition that 30 GB constitutes “heavy downloading.”  We understand the agency doesn’t want other online usage to create an issue for the accuracy of its speed tests, but they should take better care with their language.  One could use a file backup service and easily consume more then 30 GB uploading and never download more than a gigabyte.

A screenshot of the types of data SamKnows will be collecting and measuring (click to enlarge)

Other restrictions:

• You have a fixed line broadband Internet connection to your residence.  This is not for WISPs, mobile broadband, or other wireless broadband services.
• You use a standalone device to connect to your broadband service – i.e not a USB ADSL modem.
• You have a stable broadband connection (i.e. it doesn’t disconnect frequently). Note that this is just referring to the connection – not the speed.
• You have a spare power socket near your existing router (or wherever you plan to connect the unit. Keep in mind that a network cable must run between the unit and your router though! We supply a 1m cable).
• You need to be on one of the ISPs that we’re measuring.
• You are not an employee or a family member of an employee of one of the ISPs being monitored.

Also, you must agree to the following:

• Not to unplug the unit or your ISP’s router unless I’m away for an extended period of time.
• Not attempt to reverse engineer or alter the unit.
• To notify Samknows if and when I choose to change ISPs.
• To return the unit to Samknows should I no longer wish to be involved (Samknows to pay reasonable postage costs).
• To connect the unit in the way described in the documentation.
• To keep Samknows updated with valid contact details (i.e. email and postal address).

SamKnows is a British company hired by the FCC to conduct the speed test project.  SamKnows is already familiar to British broadband consumers for its comprehensive broadband availability checker showing all of the broadband choices available based on the address where service is to be installed.

The company also reports on broadband news, mostly impacting Europe.

And before the paranoid start suggesting this is Obama’s Internet Spy Box, SamKnows offers this:

However, the unit simply acts as a standard switch or standard router and does not look at any of the packets flowing across your network. It only monitors traffic volumes for the purposes of deciding when to run (or not to run!) the tests and to measure consumption.

Testing information uploaded from the unit to our servers contains no information about you whatsoever. Furthermore, all such communications are encrypted, ensuring that results cannot be tampered with en-route.

Your individual unit’s test results will be available to you alone. Your unit’s results will also be aggregated with others from the same ISP to form a larger average set of results that can be viewed publicly.

We have absolutely no intention of doing anything that may adversely affect your privacy or security.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/ITN News Ofcom report says broadband is not up to speed 7-28-09.flv[/flv]

The implications for the FCC’s national speed test program could mimic Great Britain’s, where providers were held to account for wide variations between speeds promised and those actually delivered.  Meaningful broadband reform in the States could include a requirement that providers’ marketing claims be provable, compelling at least some to perform competitive upgrades instead of delivering broken promises.  This ITN News report from last summer illustrates what happened when UK provider speed claims were put to the test.  (3 minutes)