Thanks, Gov. Cuomo

In Gov. Andrew Cuomo’s zeal to take credit for broadband enhancements across New York State, he also took partial-credit for convincing Charter Communications to speed its plan to deliver internet speeds of 100Mbps across upstate New York by early 2017, calling it “sweeping progress toward achieving its nation-leading goal of broadband for all.”

Unfortunately for New Yorkers, the governor forgot to mention his plan, coupled with the state government’s approval of Charter’s merger with Time Warner Cable, will actually result in slower and more expensive broadband for all of upstate New York.

“Access to high-speed internet is critical to keeping pace with the rising demands of the modern economy,” said Gov. Andrew Cuomo. “The New NY Broadband Program is advancing our vision for inclusive, interconnected communities that empower individuals, support small businesses, and advance innovation. These actions are a major step forward in creating the most robust broadband infrastructure network in the nation, and ensuring that reliable, high-speed internet is available to all New Yorkers.”

While the governor’s goals for rural broadband expansion in New York are laudable and have actually produced significant results, his belief in Charter’s broadband enhancement plan is misplaced and will actually leave cities in upstate New York at a serious broadband speed disadvantage that could remain an indefinite problem.

It is difficult to admit that New York was better off leaving Time Warner Cable as the dominant cable operator in New York State. As we warned last fall in our testimony to the N.Y. Public Service Commission, Charter’s merger proposal included promises of broadband enhancements considerably less robust than what Time Warner Cable had already undertaken on its own initiative. Time Warner Cable Maxx would have brought upstate New York free speed upgrades ranging from 50/5Mbps for Standard internet customers (up from 15/1Mbps) to 300/20Mbps (up from 50/5Mbps) for customers subscribed to Time Warner’s Ultimate tier.

Charter only advertises its 60Mbps tier. You have to dig through their website to discover they also sell 100Mbps, for $100 a month and usually a $200 installation fee.

Charter this week made it clear those Maxx upgrades are dead, except in areas where they have already been introduced. Instead, upstate New York (and likely other Maxx-less areas around the country) will get two internet speed tiers instead: 60 and 100Mbps.

Getting 100Mbps is better than 50Mbps, at least until you check the price. Customers should be sitting down for this. Charter’s 100Mbps tier costs $100 a month after a one-year promotional rate and often includes a one-time $200 installation fee. In contrast, Time Warner Cable charges about $65 a month for 300/20Mbps internet-only service, which incrementally rises after one year if you don’t threaten to cancel service. There is usually no installation or upgrade fee.

This is the “benefit” Gov. Cuomo is touting?

In fact, with Charter Communications to be the overwhelmingly dominant cable operator throughout upstate New York, this leaves cities like Buffalo, Rochester, Syracuse, Albany, and Binghamton in a relative broadband swamp. While cities of similar sizes in other states are qualifying for Google Fiber, AT&T’s gigabit fiber upgrade, or fiber to the home service from community-owned broadband providers, Charter’s competition includes a barely trying Frontier Communications which still offers little more than slow speed DSL, Verizon Communications which stopped expanding FiOS in New York (except Fire Island) in 2010, and a handful of small independent phone companies and fiber overbuilders serving very limited service areas.

Charter is still required to offer 300Mbps service… by 2019 in New York as part of a commitment to regulators we fought for and won. That represents a speed equal to Time Warner Cable Maxx, but Charter has three years to offer what many New Yorkers either already had or were slated to get by next year from Time Warner Cable for much less money.

It takes chutzpah to proclaim broadband victory from this kind of avoidable defeat. Gov. Cuomo’s plan for better broadband allows Charter to cheat millions of New Yorkers out of Time Warner’s much better upgrade that was scheduled to be finished this summer in Central New York and ready to commence in Rochester this fall and Buffalo early next year. The governor should be on the phone with Charter management today insisting that all of New York get the 300Mbps internet service Time Warner Cable was planning for this state. Anything less leaves New York worse off, not better.

Consider again this cold, hard reality: Time Warner Cable was the better option — that is how bad things are in New York.

Upstate cities considering their economic future must not rely on the state or federal government to solve their broadband problems. Considering what Charter and Gov. Cuomo are proposing, waiting for the cable company to make life better isn’t a solution either. The only alternative is for local community leaders to start taking control of their own broadband destiny and launch community-owned, gigabit-capable, fiber to the home service. Charter won’t do it, Frontier can’t, and Verizon is too busy making piles of money from its wireless network to worry if your city will ever have 21st century internet access it needs to compete in the digital economy.

A $500 million New York State broadband improvement fund is effectively off-limits for would-be community-owned broadband networks trying to deliver broadband service in areas for-profit providers have deemed unprofitable.

New York Gov. Andrew Cuomo’s ambitious plan to revolutionize Internet access for New Yorkers depends almost exclusively on for-profit providers and the state’s largest cable operator, Time Warner Cable – the company that has so far received the largest share of state funds earmarked for better broadband.

Cuomo wants all of New York wired for 100Mbps service no later than 2018. His goal is ambitious because the overwhelming majority of upstate New York barely now receives a maximum of 50Mbps from Time Warner Cable, the only significant cable operator in the region.

The broadband map from N.Y. State shows 100Mbps service is available only from Verizon FiOS, Cablevision, and a handful of municipal/co-op operators. Time Warner Cable only provides a maximum of 50Mbps service across upstate New York. Cablevision and FiOS compete on Long Island, Time Warner Cable Maxx competes with Verizon in New York City, and most of upstate New York is served by Verizon or Frontier DSL competing with Time Warner Cable.

Six months after the program was announced, Capital magazine reports the “New NY Broadband” plan is languishing with no defined guidelines, rules, or any clear sense about how the program will be implemented and the money spent.

Salway

In fact, one of the only clear statements coming from David Salway, a former telecommunications consultant who now administers the program, is that local governments should not bother applying because he doesn’t want them competing with Time Warner Cable, Verizon, and Frontier. It’s private enterprise only:

“The primary focus of our program is that we’re not going to be in the building business,” Salway said. He emphasized that municipal governments won’t be specifically precluded from receiving funds under the program, but said that the state is “wary” of “the government building and competing with the private sector. We see this as a provider partnership process where an incumbent provider or maybe a new entrant comes in.”

Local government leaders can read between the lines and most will not bother applying for funding if Salway’s vision guides the grant-making process. Instead, Salway wants to funnel money that effectively belongs to New York taxpayers into the pockets of for-profit providers like Verizon, Frontier, Windstream, Time Warner Cable and other providers that have consistently refused to expand their networks into rural areas on their own dime. The money earmarked for broadband is part of a $6 billion legal settlement the New York Attorney General’s office negotiated with Wall Street and commercial banks that helped plunge the country into The Great Recession.

Broadband advocates across the political spectrum are slamming the broadband program for different reasons. Christopher Mitchell from the Institute for Local Self Reliance predicts providers will deliver bait and switch broadband on the taxpayer’s dime and send the proceeds out of the area.

“When you subsidize the private sector, you don’t really know what kind of services they’re going to provide in the future,” Mitchell said. “There’s a fair number that basically rip off consumers,” and they “basically extract resources from the community they serve.”

Mitchell

“The only clear beneficiaries of this program will be cable and Internet providers, who will have a new state subsidy to expand their footprints into areas in which their competitors have demonstrated an inability to operate profitably,” said Ken Girardin of the conservative Empire Center for Public Policy, in a scathing review of the New NY plan.

So far, Verizon has shown no interest in the program. It’s eventual intent is to decommission rural landline service and push existing customers to wireless service, so applying for wired broadband expansion funding isn’t a priority. The most likely applicants include Windstream, which serves a small percentage of rural New York telephone exchanges, Frontier Communications, which dominates Rochester and parts of the Finger Lakes region, and Time Warner Cable, which used earlier funding to connect two rural communities to its cable service. But all three companies are waiting for the program and its grant terms to be better defined.

With incumbent cable and phone companies reluctant to take part, there are several wired and wireless broadband initiatives in rural areas around New York starved of resources to expand their networks. The “white space” wireless broadband project in Thurman, for example, will be seeking funding to expand its wireless high-speed network into other parts of the community. Other initiatives could allow existing middle mile fiber networks in the Southern Tier and Finger Lakes region to explore building out “last mile” service to homes and businesses that now receive only DSL or no Internet access at all.

Salway promises he’ll consider funding networks that deliver the best broadband speeds for the lowest relative price in similarly sized communities. But all the money in the world won’t help if an existing phone or cable company shows no interest in serving unprofitable rural areas even after the state defrays the initial cost of placing the infrastructure to provide the service.

Mitchell believes local communities are best positioned to know what their residents want and many support publicly funded fiber technology rollouts. He points to Longmont, Col., a community that fought off propaganda mailers and a $300,000 marketing effort by CenturyLink and Comcast to defeat public fiber broadband in the city. The residents voted in favor of building their own network to move beyond the “good enough for you” broadband coming from the phone and cable company.

“The Longmonts of the country can decide to wait until these private sector companies decide its in their interest to finally build these fiber networks out, or they can say, ‘You know, we’re always going to be behind the greater technological curve of the nation,’ and do it themselves,” Tom Roiniotis, Longmont’s general manager, told Capital.

Dunedin is New Zealand’s “Gigatown” and ISP Orcon sells residents unlimited access to gigabit speeds for $68.50US a month.

New Zealand is now the world leader in fiber optic broadband deployment, achieving an annual growth rate of 272 percent and on the way to becoming one of the top 10 nations for broadband speed.

“We are now ahead of Australia, the United States and Japan for fixed broadband, with more than 31 broadband subscriptions for every 100 New Zealanders signed up for this service,” said Amy Adams, New Zealand’s Communications Minister. “This is an impressive jump and demonstrates the impact that the government’s $2 billion investment in the Ultra-fast Broadband and Rural Broadband Initiative program is having on the telecommunications services available to New Zealanders. People are increasingly choosing fiber for its superior speeds, capacity and reliability as the build continues across New Zealand.”

Before the government intervened, broadband in New Zealand was notoriously slow and rationed with low usage allowances and speed throttling. Most of the country received ADSL service, a technology that is rapidly being discarded by most developed nations in favor of VDSL in rural areas and fiber optic broadband in urban and suburban communities. Government policy defined broadband as an essential service for the country’s current and future economic growth and implemented a nationwide broadband improvement plan designed to replace or augment outdated copper telephone lines with fiber optic infrastructure.

While countries like the United States and Canada effectively allow private corporations to define and control their digital destinies, New Zealand believes transformational ultra-fast broadband is too important to leave in the hands of industry alone.

“Fiber is very much like electricity was 100 years ago,” said Maxine Elliot, CEO of Ultra-Fast Fibre (New Zealand). “It’s the single biggest infrastructure build we have done in a long time and it will make that kind of difference in our lives. I think when they first began building out electricity, it was all about a light bulb. No one could have imagined we would have microwaves and computers. We cannot begin to imagine the change that we are about to see with fiber.”

The explosive growth of fiber broadband has helped the country leap ahead of much larger OECD members like Australia and the United States.

“Over the past ten years, we have moved up from 22nd place out of 30 OECD countries in June 2004 to being 15th out of 34 OECD countries for fixed broadband subscriptions as at June 2014,” Adams noted. “At the same time, the quality of people’s broadband packages is improving, with greater numbers of customers using VDSL or fiber, rather than the older ADSL technology.”

The fiber infrastructure has also led to other benefits not originally anticipated. Wireless companies throughout the country have tapped into the fiber connections which deliver backhaul connectivity between cell towers and the fiber broadband network, allowing greater wireless broadband speeds and more capacity. Today, New Zealand is in the top 10 in the OECD for wireless broadband.

New Zealand’s fiber network has allowed providers to cut prices, increase speeds, and offer unlimited access as an affordable option for customers who want the service. It is also expected to dramatically cut the costs of maintaining the country’s telecom network, which were growing as older copper infrastructure aged.

[flv]http://www.phillipdampier.com/video/Ultra Fast Fibre Why ultra-fast broadband.mp4[/flv]

New Zealand believes its digital future depends on fiber optics, not on last generation DSL from the phone company. This video explains the immediate benefits of discarding century-old copper infrastructure in favor of fiber optics. (3:17)

[flv]http://phillipdampier.com/video/Ultrafast Fibre Installation process.mp4[/flv]

Ultra-Fast Fibre installation is orderly, on time, and technicians will even plant new grass seed and color-match any replacement concrete or driveway patches. This video explains the three-step process customers go through to get fiber service installed. (3:59)

President Barack Obama

President Barack Obama will be in Cedar Falls, Iowa today to announce steps his administration plans to take to improve broadband in the United States, including a call to end laws that restrict community broadband development that limits competition.

“Today, too few Americans have affordable and competitive broadband choices, but some communities around the country are choosing to change that dynamic,” says a statement issued by the White House. “As a result – as outlined in a new report being issued today – cities like Lafayette, Chattanooga, and Kansas City, have broadband that is nearly one hundred times faster than the national average, yet still available at a competitive price. By welcoming new competition or building next-generation networks, these communities are pioneers in broadband that works, and today in Cedar Falls, Iowa, the President is highlighting their remarkable success stories and providing municipal leadership and entrepreneurs new tools to help replicate this success across the nation.“

The report, produced by the National Economic Council and Council of Economic Advisers, finds no evidence to support industry contentions that community-owned broadband duplicates existing broadband services and wastes taxpayer dollars. It also challenges cable and phone industry-backed groups claiming publicly owned broadband networks are business failures.

It cites the success of Chattanooga’s EPB Fiber service, operated by the local municipal utility. Not only is EPB successful financially, but it has introduced Chattanooga residents to the kind of competition sorely lacking in most cities for telecom services.

“EPB’s efforts have encouraged other telecom firms to improve their own service,” states the report. “In 2008, for example, Comcast responded to the threat of EPB’s entrance into the market by investing $15 million in the area to launch the Xfinity service – offering the service in Chattanooga before it was available in Atlanta. More recently, Comcast has started offering low-cost introductory offers and gift cards to consumers to incentivize service switching. Despite these improvements, on an equivalent service basis, EPB’s costs remain significantly lower.”

In Wilson, N.C., Time Warner Cable customers pay significantly less for cable and broadband service than other North Carolina customers because of the presence of Greenlight, the community-owned fiber to the home provider. TWC customers in Wilson pay stabilized prices for service while residents in the nearby Research Triangle pay as much as 52 percent more for basic Internet service, according to the report. Greenlight’s competition has brought gigabit broadband to the community as well as lower prices for customers who decide to remain with Time Warner. The combined savings is estimated at more than $1 million annually for Wilson residents.

EPB is the municipal utility in Chattanooga, Tenn.

Those who believe municipal broadband is a waste of taxpayer dollars should consider the story of Lafayette, La.’s LUS Fiber. In addition to bringing superior broadband service to a city dominated by a cable operator that used to treat the market as an afterthought, the presence of LUS’ fiber to the home network has forced Cox Cable to improve service, offer significant customer retention deals to departing customers and defer rate increases. The investment in community broadband has saved residents an estimated $4 million from rate hikes that went ahead in other Cox cities, with an estimated total savings of between $90 and $100 million for Lafayette-area broadband customers over LUS’ first 10 years of service.

Taxpayer-supported institutions like local government, law enforcement, and schools have also seen dramatic savings by switching to municipal solutions. In Scott County, Minn. the local government’s annual bond payment for constructing their own broadband network is $35,000 less than what the county used to pay private companies for a much slower network. Area schools that formerly paid private sector telecom companies $58 per megabit of Internet speed now pay $6.83 — a savings of nearly 90 percent. Schools also received dramatic speed increases from 100 to 300Mbps. They paid less for more service — from $5,800 a month before to $2,049 a month today. Those payments go straight back to the county government instead of into the hands of out-of-state investment bankers and shareholders. On the state level, Minnesota’s public institutional network is saving taxpayers almost $1 million a year.

With the broadband profit gravy train for big cable and phone companies grinding to a halt in competitive areas, several of these companies have spent millions lobbying state governments to outlaw public broadband services. They have succeeded in 19 states, primarily with the assistance of the corporate-funded American Legislative Exchange Council (ALEC), which appeals to primarily Republican lawmakers with claims government broadband is unfairly competing with the private sector. In fact, private providers have not been driven out of communities where they face municipal competition, but they have been forced to lower prices and improve service for customers.

Today the president will call for a new effort to support local self-determination for broadband by strongly opposing industry-backed, anti-competitive deterrents and bans on community-owned networks. The president will also sign a letter addressed to FCC chairman Thomas Wheeler encouraging him to move forward with a federal ban on state broadband laws that restrict broadband development.

He will also announce additional funding for rural broadband expansion and take steps to bring local leaders together to explore how the development of community broadband initiatives in their cities and towns can make a major difference in the 21st century digital economy. The president recognizes that most Americans lack sufficiently competitive choices for broadband service and often have just one choice — the cable company — for broadband speeds greater than 25Mbps. That means many Americans are seeing their broadband speeds lag while their monthly bills continue to grow.

Community-owned broadband may be the only alternative many cities have for better broadband as would-be competitors are scared off by high construction costs and an inability to secure cable television programming at competitive prices for their customers.

C Spire has announced the nine Mississippi cities that will be finalists for the nation’s first and only statewide 1Gbps broadband fiber to the home Internet service.

The nine communities participating in the first phase of the gigabit fiber broadband initiative include: Batesville, Clinton, Corinth, Hattiesburg, Horn Lake, McComb, Quitman, Ridgeland and Starkville. These cities and towns were among 33 municipalities that submitted formal applications late last month.

Competing cities developed aggressive campaigns featuring rallies and town hall meetings, local celebrations, door-to-door canvassing, mobilization of neighborhood groups and homeowner organizations, dedicated websites, social media campaigns and even stadium and freeway billboard advertisements to get C Spire’s attention.

C Spire also announced pricing for its Internet and related digital television and home phone services. Pricing for 1Gbps Internet access will be $80 a month, $100 a month for combined Internet and home phone, $140 a month for Internet and digital TV and $160 a month for the entire package. C Spire Wireless customers will receive an extra $10 monthly discount on all packages.

The finalist cities were selected by a C Spire review panel that considered factors like proximity to the company’s fiber optic infrastructure, community mobilization capabilities and incentives to speed up the construction process and reduce overall costs.

“We are truly impressed with the overwhelming show of support for C Spire’s Fiber to the Home deployment and the tremendous interest and demand for making this service a reality for the residents in these communities,” said Hu Meena, president and CEO of C Spire. “The positive response we’ve received only strengthens our determination to bring 100-times-faster Internet, and the limitless possibilities that come along with it, to as many people as we can because we know that this service has the power to transform our state into a hub for technology investment and economic growth.”

The nine finalists for C Spire’s gigabit broadband network.

Meena said C Spire plans to continue working with the cities that were not selected in the preliminary round and will share best practices and improvements that promise to make the process easier, faster and better for later challenges.

“We want to ensure that all of our communities remain actively engaged in the process and keep the demand and excitement alive for upcoming phases,” he said.

The finalist communities will next compete to see which can pre-register the most homeowners in designated fiber neighborhoods. Those that reach their targets will get fiber service first.

As soon as neighborhoods reach their percentage goals in an individual city, C Spire plans to begin construction in those areas – so there is a possibility that work could start in more than one community at the same time, said Gregg Logan, senior vice president of C Spire Fiber.

Residents will be asked to make a $10 refundable deposit and provide credit card information when they pre-register. The website also will feature detailed, interactive maps of neighborhoods in cities showing progress each one is making toward turning their fiberhood “green” and qualifying for build out of the service.

Logan said C Spire hopes to start turning up 1 Gig service in the first C Spire Fiber neighborhoods by the middle of next year.