This dollar-a-holler astroturf effort failed to impress Longmont voters, who turned back a Comcast-funded opposition campaign to open up the city's fiber network.

Longmont, Col. residents turned their backs on a Comcast-funded campaign to block the opening of the city’s 17-mile fiber loop to competing broadband providers in a strong vote of approval.

As of early this morning, 60.8% of voters approved Ballot Question 2A.  Just 39.2% opposed the measure.

Longmont’s fiber network, built in 1997 and paid for by the Platte River Power Authority, has heretofore been off-limits to the public.  Colorado’s 2005 corporate welfare laws guarantee that taxpayer or ratepayer-funded broadband networks are kept away from the public that paid for them, for the protection of companies like Comcast and CenturyLink.

This results in the construction of showcase institutional fiber optic networks open to government, public safety, hospitals, and libraries… and practically nobody else.  Once built, institutional networks often go underutilized.  In Longmont, at least two-thirds of the city’s fiber optic network still goes unused 15 years after it was built.

The city government hoped to open the fiber network in time to bolster their application to Google to construct a gigabit network for residential and business customers, but after Google selected Kansas City for its fiber project, Longmont wants to keep its options open.  Passing the ballot question does exactly that.

“I’m glad to see 2A won,” Mayor Bryan Baum told the Times-Call. “I think it shows that money isn’t the determinator.”

Longmont voters were subjected to one of the most expensive pushback campaigns they’ve ever seen, thanks to Comcast, who spent $300,000 and counting to get the public to turn against the fiber network ballot question.

George Merritt, a spokesman for the cable-funded group Look Before We Leap, claims the vote results show “the measure’s narrow margin of victory.”  Merritt’s group relied heavily on a highly-suspect 2006 case study by University of Denver professor Ron Rizzuto that claimed 80 percent of community-owned Wi-Fi broadband networks failed to make money.  But the group didn’t make any distinction between Wi-Fi and fiber optics, and more importantly they left out the fact Rizzuto was inducted into the Cable TV Pioneers in 2004 for service to the cable industry.  Rizutto’s “study” was a classic case of dollar-a-holler research on behalf of the New Millennium Research Council, a creature of the telecommunications industry.

New Millennium Research Council -> Issue Dynamics -> Comcast

In fact, the Council is a “project” of Issue Dynamics, Inc., a for-profit, high powered Washington lobbying firm. Issue Dynamics’ client list includes Verizon, Comcast, AT&T and the United States Telecom Association – the trade association for the telecom industry.  The direct relationship between Rizzuto’s findings, and cable companies like Comcast who paid for the research, never made it into the report (or onto the group’s website).

This is the second time Longmont voters have cast ballots on the issue of the city’s fiber optic network.

In 2009, voters faced another cable industry-funded astroturf effort, with $245,000 spent to successfully defeat a similar measure.  This time, thanks in part to public exposure of the companies pulling the strings behind the astroturf campaign, voters rejected the propaganda onslaught and passed the measure.  Cable bills have also increased several times since the 2009 measure, a reminder to the public why competition can make a real difference.

With the passage of 2A, the city can choose to leave the network exactly as it is today or partner with another provider to offer services to the public.  It’s now their choice, not Comcast’s.

Phillip Dampier on USF Reform: It might have been great, it could have been a lot worse, but ultimately it turned out to be not very good.

Last week, the Federal Communications Commission unveiled their grand plan to reform the Universal Service Fund, a program originally designed to subsidize voice telephone service in rural areas deemed to be unprofitable or ridiculously expensive to serve.  Every American with a phone line pays into the fund through a surcharge found on phone bills. Urban Americans effectively subsidize their rural cousins, but the resulting access to telecommunications services have helped rural economies, important industries, and the jobs they bring in agriculture, cattle, resource extraction, and manufacturing.

The era of the voice landline is increasingly over, however, and the original goals of the USF have “evolved” to fund some not-so-rural projects including cell phone service for schools, wireless broadband in Hollywood, and a whole mess of projects critics call waste, fraud, and abuse.  For the last several years, USF critics have accused the program of straying far from its core mission, especially considering the costs passed on to ratepayers.  What originally began as a 5% USF surcharge is today higher than 15%, funding new projects even as Americans increasingly disconnect their landline service.

For at least a decade, proposals to reform the USF program to bridge the next urban-rural divide, namely broadband, have been available for consideration.  Most have been lobbied right off the table by independent rural phone companies who are at risk of failure without the security of the existing subsidy system.  Proposals that survived that challenge next faced larger phone company lobbyists seeking to protect their share of USF money, or by would-be competitors like the wireless industry or cable operators who have generally been barred from the USF Money Party.

This year, FCC Chairman Julius Genachowski finally achieved a unanimous vote to shift USF funding towards the construction and operation of rural broadband networks.  The need for broadband funding in rural areas is acute.  Most commercial providers will candidly admit they have already wired the areas deemed sufficiently profitable to earn a return on the initial investment required to provide the service.  The areas remaining without service are unlikely to get it anytime soon because they are especially rural, have expensive and difficult climate or terrain challenges to overcome, or endure a high rate of poverty among would-be customers, unable to afford the monthly cost for the service.  Some smaller independent phone companies are attempting to provide the service anyway, but too often the result is exceptionally slow speed service at a very high cost.

The new Connect America Fund will shift $4.5 billion annually towards rural broadband construction projects.  Nearly a billion dollars of that will be reserved in a “mobility fund” designated for mobile broadband networks.

The goal is to bring broadband to seven million additional households out the 18 million currently ignored by phone and cable operators.

The FCC believes AT&T will take a new interest in upgrading its rural landline networks, even as the company continues to lobby for the right to abandon them.

Unfortunately, the FCC has set the bar pretty low in its requirements for USF funding.  The FCC defines the minimum level of “broadband” they expect to result from the program — 4/1Mbps.  That’s DSL speed territory and that is no accident.  The phone companies have advocated a “less is more” strategy in broadband speed for years, arguing they can reach more rural customers if speed requirements are kept as low as possible.  DSL networks are distance sensitive.  The faster the minimum speed, the more investment phone companies need to make to reduce the length of copper wiring between their office and the customer.  Arguing 4Mbps is better than nothing has gotten them a long way in Washington, but it also foreshadows the next digital divide — urban/rural broadband speed disparity.  While large cities enjoy speeds of 50Mbps or more, rural towns will still be coping with speeds “up to” 4Mbps.

The FCC does not seem too worried, relying heavily on a mild incentive program to prod providers to upgrade their DSL service to speeds of 6/1.5Mbps.

The irony of asking AT&T to invest in an aging landline network they are lobbying to win the right to abandon is lost on Washington, and future speed upgrades for rural America from companies like Verizon are in serious doubt when they sell off their rural areas to companies like FairPoint and Frontier and leave town.

Critics of USF reform suggest the program is still stacked in favor of the phone companies, and considering the state of their copper wire networks, would-be competitors are scratching their heads.

The cable industry, in particular, is still peeved by reforms they feel leave them at a disadvantage.  Of course, Washington may simply be recognizing the fact cable companies are the least likely to wire rural America, but when they do, the service that results is often faster than what the phone company offers.  The nation’s biggest cable lobbyist — ironically also the former chairman of the FCC, Michael Powell — still feels a little abused after reading the final proposal.

“While we are disappointed in the Commission’s apparent decision to ignore its longstanding principle of competitive neutrality and provide incumbent telephone companies an unwarranted advantage for broadband support,” said National Cable & Telecommunications Association President Michael Powell, “we remain hopeful that the order otherwise reflects the pro-consumer principles of fiscal discipline and technological neutrality that will bring needed accountability and greater efficiency to the existing subsidy system.  We are particularly heartened by the Commission’s efforts to ensure that carriers are fairly compensated for completing VoIP calls.”

Wireless operators are not happy either, because the arcane requirements that come with the USF bureaucracy were written with the phone companies in mind, not them.  Small, family-owned providers find it particularly difficult to do business with the USF, if only because they don’t have the staff or time to navigate through endless documents and forms.  Phone companies do.

Your phone bill is going up.

Many consumer groups are relieved because it could have been much worse.   The FCC could have simply capitulated and adopted the phone companies’ wish-list — the ABC Plan.  Thankfully, they didn’t, but the FCC has naively left the door open to substantial rate increases for consumers by not capping the maximum annual outlay of the fund.  That follows the same recipe that invited higher phone bills and questionable subsidies awarded in an effort to justify the original USF program even after it accomplished most of its goals. Consumers may face initial rate increases of $0.50 almost immediately, and up to $2.50 a month five years from now.

The FCC, unjustifiably optimistic, suspects phone companies and other telecommunications interests won’t gouge customers with higher prices.  They predict rate increases of no more than 10-15 cents a month.  I wouldn’t take that bet and neither will consumer groups.

“We’re going to press the FCC to ensure that these are temporary increases, because history has shown that these types of costs tend to stick around and go on and on and on,” said Parul Desai, policy counsel for Consumers Union.

An even bigger question left unanswered is just how far the FCC will get into the broadband arena when it refuses to take the steps necessary to ensure it has an admission ticket.  The agency has avoided classifying broadband as a telecommunications service, an important distinction that would bolster its authority to oversee the industry.  Without it, some members of Congress, and more importantly the courts, have questioned whether the FCC has any business in the broadband business.  Just one of the many high-powered players in the discussion could test that theory in the courts, and should a judge throw the FCC’s plan out, we’ll be back at square one.

[flv]http://www.phillipdampier.com/video/C-SPAN Tom Tauke from Verizon on Changes to the Universal Service Fund 10-29-11.flv[/flv]

Verizon’s chief lobbyist Tom Tauke spent a half hour last weekend on C-SPAN taking questions about USF reform and the side issues of IP Interconnection and Net Neutrality policies. Tauke supports consolidation of small phone companies into fewer, larger companies.  He also expands on his company’s lawsuit against Net Neutrality, which fortuitously (for Verizon) will he heard by the same D.C. Court of Appeals that threw out the FCC’s fines against Comcast for throttling broadband connections.  Politico’s Kim Hart participates in the questioning, which also covered wireless spectrum issues impacting Verizon Wireless, AT&T’s stumbling merger deal with T-Mobile, and Verizon’s latest lawsuit against the FCC for data roaming notification rules.  (28 minutes)

Rogers Cable lets their customers purchase this cable box outright to avoid rental charges.

Stephen Simonin first came to our attention in January 2010 when he proposed charging cable operators room and board for their expensive cable set top boxes they require subscribers to rent.  Now, the chairman of the Litchfield (Conn.) Cable Advisory Council is back with another salvo — demanding an end to mandatory rental charges for cable TV equipment and access to competing providers:

The biggest industry in the US that has money for jobs is the entertainment industry. Federal law requires Cable to carry local broadcast and public channels in the clear for all. If we contact our Federal representatives and ask them to add: “Must carry adjacent competitors programming” We would add a million USA jobs immediately. Paid for by corporate cable and NOT tax dollars!

Cable has forced all of us to RENT cable boxes. We are not allowed to buy them because this is guaranteed free revenue forever for them. A box costs less than $100 and we pay nearly $10 a month for rental and power each month. Cablevision makes over $1,000,000,000 a year on set top box rentals alone. This is only one company! They have compressed TV to less than 20% of the transport. They use the other 80% for business and not covered under TV franchise (Wi-Fi, data, phone business). However, they use the TV franchise for this monopoly access to our front doors.

Adding this must carry clause will allow up to 5 different cable providers at our front doors for lower costs, higher quality and real competition. Cable will not want to give up that fat 80% business revenue they have today and will need to add a new fiber/co-ax transport across the country on their nickel! Think how many local jobs $1,000,000,000 can pay for. Now remember that we have several cable companies here in CT!

These are American jobs! Please help us get this passed! Call our Federal Congressman and Senators today. Remind them of the details I have sent them on behalf of the People.

Simonin’s proposal, sent to Stop the Cap!, enjoys some precedent… in Canada.

Sky Angel, a Christian television distributor, abandoned satellite in favor of IPTV several years ago. Their subscribers watch Sky Angel's channel lineup over a broadband connection.

Consumers there can purchase cable boxes in stores like Best Buy ranging from $80 for a refurbished unit that works with Shaw Cable to $500 for a cable box with DVR designed for Rogers Cable customers.  Buying your own box puts an end to rental fees, often $7+ per month, which never stop, even after the box is effectively paid for in full.  But for those seeking a built-in DVR, the initial price tag is on the steep side.  The practice of buying boxes has also generated some surprising competition between Rogers and itself.  When customers call to inquire about new service, Rogers often includes discounts including free box rentals, making it unnecessary to purchase the box at all (as long as you remember to re-negotiate an extension of the promotion when it ends).  That’s a savings of nearly $100 a year for some customers.  Buying DVR equipment guaranteed to work with your current provider also makes it easy to upgrade the device with larger capacity hard drives that can store more programming.  Since the failure point for most DVR’s is the hard drive, occasional replacements and upgrades can keep a box running for years.  Many pay providers in the United States charge higher rental prices for higher capacity equipment, with no option to buy.

Simonin’s proposal to open up cable networks to other providers is more novel, and probably a lawyer’s dream come true for the endless litigation it offers.  It’s highly unlikely the courts will side with the notion of forcing cable operators to open their infrastructure to competing providers, and considering the amount of informal collusion between companies today, it’s probably not going to deliver much savings.

A bigger hope on the horizon is the ongoing march to IPTV — television programming delivered using Internet technology.  With strong Net Neutrality policies in place (and a strong position against Internet Overcharging with usage caps or usage-based billing), dozens of new virtual “cable companies” could be launched, delivering their lineups over the Internet, direct to computer and television screens.  That could deliver consumers an endless choice of providers, assuming regulatory oversight is in place to make sure programming is available to all at fair and reasonable prices and that broadband providers are not allowed to block or impede access to the offerings that result.

It’s much easier to do an end run around Big Cable than trying to find a way to get them to change their business plans.

Besides sports, the biggest challenge for cord-cutters is to find access to 24-hour news channels they give up when they cancel pay television service.  While cable news often doesn’t actually spend much time on “news” when breaking stories are few and far-between, when something serious does happen, cord-cutters looking for live coverage can and do miss access to news networks.

But now a New York startup, RadixTV, has a solution for news junkies: Rtv.

Yesterday, the company launched a package of four cable news networks — Bloomberg, CNBC, CNBC World, and MSNBC streamed live 24 hours a day for $14.99 a month.

That’s a steep price for four channels, of which MSNBC is arguably the most important.  The company plans to expand to 10 channels in the future, including CNN, Fox News, and international news networks like BBC World, France 24 and Al Jazeera English that American cable companies routinely ignore.

Kaul

Rtv is pitched primarily to Wall Street — financial firms, brokerages, and investment businesses that want access to continuous business news but don’t need a traditional cable package.  In fact, the package is technically only supposed to be sold to business customers, but anyone can sign up if they say they are stock traders, accountants, investors, etc.

Stop the Cap! sampled Rtv this morning and found the service to work well with our broadband connection, although at times crawling news and stock prices found at the bottom of the screen on some channels seemed less smooth than they could be.  It occasionally was distracting.  MSNBC was the most compelling channel in the lineup, although we’d love to see international news channels even more.  But $15 a month is still a high price to pay.

The company’s CEO, Bhupender Kaul, worked for Time Warner Cable for nearly two decades, and believes the future of cable TV is likely to be Internet-based, with programming sold in niche packages like his.  True a-la-carte may be too unwieldy for providers to pull off, but selling groups of channels together might not.  Still, Kaul seems intent on not aggravating the industry as much as earlier cord-cutting online viewing services, which have all since been sued out of existence.  Local broadcast and general interest programming does not come with Rtv.  While a six figure-salaried Wall Street banker won’t mind $15 a month, you might.

Further reading: In New Web TV Service, A Glimpse of the Future

Phillip "Wants a High Fiber Diet" Dampier

Believe it or not, there are still some people out there who believe wireless broadband, as it exists today, is the future of high bandwidth communications in North America.  Forget DSL, forget cable, forget fiber optics, they say.  Technology like 4G and WiMax are “far superior” and cheaper.

To be fair, most of the people advocating the technology Sprint is in the process of abandoning have a vested interest in stopping fiber broadband projects.  That is because while Verizon continues to sit on its hands expanding its excellent FiOS fiber-to-the-home service, some of the most aggressive fiber projects in the country are being built by your local town, city, or village government.  It’s community-owned broadband, by and for the people in your own area.  Large telecom interests that have always refused to deliver fiber service (or pretend to by using the word ‘fiber’ while not bringing a single strand to your home) have it in for potential competitors that are willing to provide the advanced fiber technology they won’t.

So why aren’t big phone and cable companies providing this level of service?  In a word, money.  Their shareholders don’t like the initial cost of deploying fiber to the home service, even though the technology is superior to what reaches your home today, is infinitely expandable without stringing new cables across town, and can support money-making applications developers and providers have not even dreamed of yet.  With a pervasive lack of competition, there is nothing to overcome Wall Street’s conclusion that fiber doesn’t deliver fast enough profits to justify the initial expense.

When you take Wall Street out of the equation, especially in the telecom sector, the math works very differently.  While the phone and cable company is probably telling you “no,” companies like Google are saying yes in Kansas City.  So are municipally-owned rural co-operative phone and cable companies.  Communities deciding broadband is too important to leave to the phone companies that deliver half their residents 1-3Mbps DSL and call it a day are saying yes to fiber optics as well.

Overseas, fiber networks are being built in countries in Eastern Europe where the economics would never make sense by Wall Street standards, yet residents (and perhaps more importantly new digital economy businesses) are now getting Internet speeds of 100Mbps or better.  The next countries that could import good-paying American jobs might be Lithuania, Latvia, Poland, Romania, and Bulgaria.

So what does it take to adapt to this reality in North America?  Providers that are willing to make a long term investment in fiber broadband — one that may take a few extra years to pay back, but will generate dividends like increased employment, capacity to provide better, faster service, more reliable networks, and earning a piece of the action powering North America’s new digital economy.  If they won’t listen, tell your elected officials to support policies that promote additional competition and back community broadband expansion that can make all the difference between 3Mbps DSL and 100Mbps fiber.

[flv width=”640″ height=”372″]http://www.phillipdampier.com/video/Fiber is Better.flv[/flv]

Watch and share this video with friends and family to educate them about the infinite possibilities of fiber optic broadband and learn why it is superior to usage-capped wireless, slow speed DSL, satellite fraudband, or lopsided cable “High Speed Internet” broadband that delivers high speed in only one direction. (3 minutes)