Reardon is fine with this vision of your online future.

Marguerite Reardon confesses she’s confused.  She doesn’t understand what all the fuss is about regarding Google and Verizon teaming up to deliver a blueprint for a corporate compromise on Net Neutrality.  In a column published today, Reardon is convinced she’s on a debunking mission — to deliver the message that rumors of the Internet apocalypse are premature.

As I read the criticism of Google and Verizon’s supposed evil plan to demolish the Internet, and as I hear about “protests” of several dozen people at Google’s headquarters, I scratch my head and wonder: am I missing something?

The Google-Verizon Net neutrality proposal I read last week doesn’t sound nearly as apocalyptic as Free Press, a media advocacy group, and some of the most vocal critics out there have made it sound.

In fact, most of proposal sounded a lot like a plan FCC Chairman Julius Genachowski offered nearly a year ago, which many Net neutrality proponents seemed to support.

In short, Google and Verizon say they agree to a set of rules for the Internet that would prohibit broadband providers from blocking or degrading lawful content on the Internet. Broadband providers would also not be allowed to take action to impede competition.

This is pretty much what Genachowski has proposed.

OK, terrific. There is agreement.

But wait, Net neutrality zealots are still unhappy.

Hmmm… “zealots?”  Reardon probably just angered the majority of CNET’s readers, who now find themselves labeled as crazed Internet online freedom fighters — net fundamentalists who want absolute protection against big Internet Service Providers tampering with their Internet Experience.

Where can I get my membership card?

Reardon’s “debunk” consists of her narrow, inaccurate definition of Net Neutrality pounded into a pre-conceived notion of what is and is not possible in a competitive broadband marketplace.  In short, she’s satisfied we can all move along… there is nothing to see here:

What Free Press and Public Knowledge don’t seem to realize is that AT&T and Verizon already offer differentiated services today with enhanced quality of service to business customers. Verizon’s Fios TV and AT&T’s U-verse TV services are also examples of managed Internet services that are delivered to consumers. And the last time I checked, no one, other than their cable competitors, has complained about AT&T and Verizon offering competition in the TV market.

The truth is that if Verizon and AT&T wanted to cannibalize their broadband business with premium broadband services, they’d already be doing it. But they aren’t, because there hasn’t been a market for it.

The reality is that consumers are in control of what type of services are offered. If the public Internet can adequately deliver a service for free, then there’s no need to pay for it. But if someone can provide a better service over a dedicated network and there are consumers willing to pay for it, then why shouldn’t it be offered? Isn’t that why some people subscribe to a 768Kbps broadband service for $15 a month, and others pay $100 for a 50Mbps service?

So let’s debunk the debunk.

First, Net Neutrality is not about stopping broadband providers from offering speed-based tiers of service.  In fact, that’s the Internet pricing model we’ve all come to know and love (although those prices are just a tad high, aren’t they?)  Free Press and Public Knowledge do not object to ISPs selling different levels of broadband speed tiers to consumers and businesses to access online content.

Net Neutrality isn’t about stopping ISPs from selling some customers “lite” service and others “mega-super-zippy Turbo” service — it’s about stopping plans from some ISPs to establish their own toll booths on the Internet to charge content producers twice — once to upload and distribute their content and then a second time to ensure that content reaches a particular ISPs customers on a timely, non-speed-throttled basis.  Consider this: you already pay good money for your own broadband account.  How would you feel if you sent an e-mail to a friend who uses another ISP and that provider wanted to charge you 20 cents to deliver that e-mail?  Don’t want to pay?  That’s fine, but your e-mail might be delayed, as paying customers enjoy priority over your freebie e-mail.

A lot of broadband customers may never understand the implications of giant telecom companies building their own toll lanes for “preferred content partners” on the Internet because they’ll just assume that stuck online video or constantly rebuffering stream is the fault of the website delivering it, not their provider intentionally pushing it aside to make room for content from companies who paid protection money to make sure their videos played splendidly.

Second, Reardon need only look to our neighbors in the north to see a non Net Neutral Internet experience in Canada.  There, ISPs intentionally throttle broadband applications they don’t want users running on their networks.  They also spank customers who dare to try what Reardon insists Verizon would never stop — using their broadband service to watch someone else’s content.  With the application of Internet Overcharging like usage limits and consumption billing schemes, cable companies like Rogers don’t need to directly block competitors like Netflix.  They need only spike customers’ broadband bills to teach them a lesson they’ll not soon forget.

Within days of Netflix announcing their imminent arrival in Canada, Rogers actually reduced the usage allowances of some of their broadband customers.  If you still want to watch Netflix instead of visiting Rogers pay-per-view cable menu or video rental stores, it will cost you plenty — up to $5 per gigabyte of viewing.

Reardon seems to think giant providers like AT&T, Verizon, and Comcast care about what their customers want and wouldn’t jeopardize the customer relationship.  Really?  She herself admits she hates paying for hundreds of channels she never watches, yet providers are deaf to complaints from customers demanding an end to this practice.  What about the relentless price hikes?  Wouldn’t that drive off customers?  Perhaps… if customers had real alternatives.  Instead, with an effective duopoly market in place, subscribers pay “the man,” pay an almost identical price from the “other guy,” or go without.

Providers understand their power and leverage in the marketplace.  Until serious competition arrives, it would be a disservice to stockholders not to monetize every possible aspect of broadband service in the United States.

The check against this naked aggression on consumers’ wallets is from consumer groups who are fighting against these big telecom interests.

Before dismissing Net Neutrality “zealotry,” Reardon should experience the Internet in Canada and then get back to us, and more importantly those consumer groups she flicks away with disdain, and join the fight.

Mehlman

A telecom industry front group acknowledged today American broadband in the last decade has not won any awards for speed or price, but if you just give the industry ten more years of deregulation, there will be more competition than ever to change that.

For the Internet Innovation Alliance’s Bruce Mehlman, the cable and phone companies have done a fine job bringing broadband to Americans, especially considering the industry is only ten years old.  If you leave things the way they are today, the next decade will bring even more competition from phone and cable companies, he promises.

But consumer groups wonder exactly how a duopoly will ever deliver world class service in the next ten years when it has spent the last ten hiking prices on slow speed broadband and now wants to limit or throttle usage.

This afternoon, National Public Radio’s All Things Considered tried to referee the broadband debate, pondering whether America is a world leader in broadband or has just fallen behind Estonia.  Reporter Joel Rose was perplexed to find two widely diverging attitudes about broadband, each with their set of numbers to prove their case.

On one side, consumers and public interest groups like Consumers Union and Free Press who believe deregulation and industry consolidation has created a stagnant broadband duopoly that only innovates how it can get away with charging even higher prices.

On the other, the phone and cable companies, the groups they finance, and their friends on Capitol Hill who believe there isn’t a broadband problem in the United States to begin with and government oversight would ruin a good thing.

Compared with other nations, the United States has continued to see its standing fall in broadband rankings measuring speed, price, adoption rates, and quality.  When East European countries and former Soviet Republics now routinely deliver better broadband service than America’s cable and telephone companies, that story writes itself. Embarrassed industry defenders prefer to confine discussion of America’s broadband success story inside the U.S. borders, discounting comparisons with other countries around the world.

For Rep. Joe “I Apologize to BP” Barton (R-Texas), it’s even more simple than that.  Even questioning the free market is downright silly.

“As everybody knows, if it’s not broke, don’t fix it,” Barton said at a March congressional hearing to discuss broadband matters. “And y’all are trying to fix something that in most cases isn’t broke. Ninety-five percent of America has broadband.”

Industry-financed astroturf and sock puppet groups readily agree, and dismiss industry critics.

Bruce Mehlman, co-chair of the industry-supported Internet Innovation Alliance, which opposes more regulation, acknowledges that the story of broadband in the U.S. is a classic glass-half-full, glass-half-empty predicament. Still, he says he thinks broadband adoption in the U.S. is going pretty well considering broadband has only been available for 10 years.

“For the optimist, you’d say within a decade we’ve seen greater broadband deployment than you saw for cell phones, than for cable TV, than for personal computers,” Mehlman says. “It’s one of the great technology success stories in history.”

Mehlman says Americans don’t need more government intervention to make broadband faster and cheaper. “We haven’t yet and that’s in the first decade,” he says. “In the second decade, the marketplace is only going to be that much more competitive.”

Kelsey

The problems go further than that, however.

Derek Turner, research director for the public interest group Free Press, told NPR broadband rankings tell an important story. “For the providers to try to say that there’s no problem, it’s merely just a smoke screen,” he says.

Providers would prefer to measure their performance against each other instead of comparing themselves with foreign providers now routinely providing better, faster, and cheaper service than what American consumers can find.  They have to, if only because of those pesky international rankings illustrating a wired United States in decline.

Joel Kelsey at Consumers Union tells NPR there is an even bigger question here — what role broadband plays in our lives.

Because 96 percent of Americans can only get broadband from a duopoly — the phone or cable company, the only people truly singing the praises of today’s broadband marketplace are the providers themselves and their shareholders.  Consumers see a bigger problem — high prices, and particularly for rural consumers, slow speeds.

“If you talk to [the] industry,” Kelsey says, “they think of broadband as a private commercial service akin to pay TV or cable TV.”

On the other hand, Kelsey says, “There’s a lot of folks who think it is an essential input into this nation’s economy — an essential infrastructure question.”

National Public Radio reporter Joel Rose dived into the battle over broadband numbers between consumer groups and industry representatives. Is America’s broadband glass half-full or half-empty? (June 28, 2010) (4 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

One out of every four American families has now cut the cord on their landline phone service.

With cellular bills increasing, many people are deciding the traditional phone line that has been them for decades is no longer worth the expense, especially if you spend most of your time reaching for your cell phone to make or receive calls.

But is dropping landline service such a great idea?

Here are some things to consider:

PRO

• Reduced expense for the family budget
• If you don’t use it much, why pay for it?
• Many cable companies offer less expensive “digital phone” products that can be bundled with your cable and broadband service
• Skype, Google Voice, and Voice Over IP services can often knock phone service costs down to just a few dollars a month
• Portability

CON

• 911 emergency services have a harder time identifying your location
• Call sound quality is usually lower than traditional landlines
• Your telephone directory listing will become unavailable unless you make special provisions to keep it
• The costs for cell phone service are often higher than basic landline service
• Monitored alarms and certain other services require either a landline or added-cost wireless technology
• During periods of unrest or bad weather, call volumes can increase exponentially causing disruptions to cell phone service

Telephone companies are increasingly desperate to hold on to their customers, and many remind departing customers the chance to retain their landline service at dramatically lower pricing.  Many companies offer budget, non-flat rate calling plans for less than $10 a month, but you’ll pay between 8-11 cents for every local call.  Others offer calling allowances of 250 or fewer local calls per month.  A few larger cities have calling plans that charge by the minute.

If you are considering dropping your landline, be sure to consider all of the options and alternatives before disconnecting service.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WCPO Cincinnati Pros cons of dropping your landline phone 5-12-10.flv[/flv]

WCPO-TV in Cincinnati provides additional insight into landline disconnections and your alternatives.  (2 minutes)

Senator Hoyle's legislation lays the foundation for cable and phone companies to spend hundreds of thousands of subscriber dollars to mail smear campaign pieces like this one from Comcast.

(This piece is written by Jay Ovittore and Phillip Dampier.)

The good news is that all the pushback on an all-out-moratorium on municipal broadband was successful and Senator David Hoyle (D-Gaston) withdrew the idea.  The bad news is he had an even worse idea to replace it.

Hoyle Wednesday unveiled a new draft bill that hopelessly ties up municipal broadband projects into knots of red tape that, if passed into law, will bury municipal broadband projects in North Carolina indefinitely.

Hoyle sprung his telecom-industry-friendly legislation on the public after getting plenty of input and encouragement from the state’s cable and phone companies who already knew what was in it because they helped craft it.

For a retiring state senator who doesn’t have to worry about the next election, what better parting gift can you give to your friends in the cable and phone industry than a bill that preserves the comfortable duopoly they’ve  enjoyed for years.

Hoyle and those supporting the legislation will argue their bill doesn’t ban municipal broadband — it simply places conditions on such projects before they can go forward.  But what are those conditions?

Section One of the draft bill requires local governments to get funding for “external communications services” (ie. municipal broadband) by way of a General Obligation Bond (a GO Bond).  In North Carolina, that requires a taxpayer-funded referendum to be held for public input at the next election.

On the surface, getting public approval for municipal broadband isn’t a bad idea — no local government official expecting to win re-election would ever proceed on such projects without voter support.  But this requirement also gives plenty of advance notice to incumbent providers that a new player could be invading their turf.

We know what that means.  A well-funded opposition campaign to demagogue the project.  Local cable companies can insert an unlimited number of free ads during every advertising break to slam the proposal.  Phone companies can release a blizzard of opposition mailers to convince consumers it’s as scary as Halloween — all tricks and no treats.

How can a local city or county government respond to the misinformation barrage?  They can’t.  Public officials can’t spend taxpayer dollars to promote such projects or refute industry propaganda.  They can’t even financially assist a citizen-run campaign.

That’s a fight with ground rules only Don King could love.

In the end, that leaves ordinary citizens of North Carolina facing down a multi-billion dollar statewide consortium of telecommunications interests hellbent on preserving and protecting the status qu0.

The earlier-discussed moratorium was a brick wall against municipal broadband.  Hoyle’s bill is the Great Wall of China with the logos of AT&T, Time Warner Cable, and CenturyLink plastered all over it.

But wait, there’s more.  To deal with municipal broadband projects that got an initial green light to dare to interfere with the phone and cable industries’ grand business plans, another provision provides a near endless supply additional referendums to get rid of the projects.  Hoyle’s bill actually demands more votes should existing systems need:

• refinancing to reduce the interest rate or restructure existing debt;
• to make repairs to the system’s “fixtures;” and/or
• to upgrade the system to meet subscribers’ needs.

Ponder the insanity:

• The legislation could be interpreted to demand a public referendum if your service goes out.  Can you wait until the next election to get back your cable service?
• If a municipal broadband fiber cable falls in your backyard, does it make a sound?  It won’t, but you will when you learn that cable might not be reattached to the pole until the whole town holds a referendum about it;
• Would you be upset if your local municipal provider could refinance its debt at a much lower interest rate, letting them cut their prices, but they can’t before the next election?
• While cable and phone companies refuse to upgrade their service to levels that would have made such municipal alternatives unnecessary, they also want to make certain the one provider that did meet your needs can’t upgrade… without a public vote.

These systems are not constructed with public tax dollars, but Senator Hoyle wants every citizen in a community, subscriber or not, to ponder the future of a local municipal broadband provider.  It’s like giving AT&T veto power over Time Warner Cable’s channel lineup.  Guess who has to pay for these constant referendums?  Taxpayers.  So while Senator Hoyle complains municipal broadband costs the state tax revenue, his legislation guarantees increased government spending on pointless referendums.  That’s logic only a politician working for the interests of big cable can appreciate.

For the cable and phone companies, and their good friends in the North Carolina legislature, this is their idea of a level playing field.  In reality it’s about as level as a downhill ski run.

Let’s extend that “fairness” out to incumbent cable and phone companies and consider whether you got a vote on:

• Whether or not the cable and phone companies got to put their wires on phone poles plunked down in front of your house;
• Whether or not you wanted either company to dig up your yard to bury their wiring;
• Whether you wanted that giant metal refrigerator-sized metal box installed on your street, in your yard, or on the phone pole you see from your window every day;
• Whether or not you want the cable company to repair Mrs. Jenkins’ problems with HBO up the street whenever it rains or replace the cable the squirrels chewed up;
• What channels and services you want to pay for, which ones you do not, and at what price you need to pay your local phone or cable company.
• What cable or phone company gets to provide service in your community.

Apparently the fairness concept only applies to potential new competitors, not the existing providers.

Let’s also consider the cable television industry didn’t just magically bloom into a multi-billion dollar business without government help.  In the early days of cable television, investors were assured that they were financing a monopoly provider, guaranteed through a franchise agreement process that gave newly built cable companies exclusivity to help repay construction costs.  Franchise wars broke out between 1978 and 1984 as competing companies promised the moon with state-of-the-art two-way cable systems with the capacity to offer 70 or more channels.  The players then included Time’s American Television and Communications Corporation, Warner’s Amex, and Telecommunications, Inc. (TCI).  ATC and Amex would later evolve into Time Warner Cable and TCI became AT&T Cable before being sold to Comcast.  Communities seeking cable television for their residents would later learn a lot of these promises made were promises broken – reneged on by large cable companies with few, if any consequences.

During the Reagan Administration, then-FCC Chairman Mark Fowler bestowed additional deregulation benefits on the cable industry.  The Museum of Broadcast Communications explains:

The Cable Communications Policy Act of 1984 addressed the two issues that still hindered cable television’s growth and profitability: rate regulation and the relative uncertainty surrounding franchise renewals. Largely the result of extensive negotiation and compromise between the cable industry’s national organization, the National Cable Television Association, and the League of Cities representing municipalities franchising cable systems, the act provided substantial comfort to the cable industry’s future.

Its major provisions created a standard procedure for renewing franchises that gave operators relatively certain renewal, and it deregulated rates so that operators could charge what they wanted for different service tiers as long as there was “effective competition” to the service. This was defined as the presence of three or more over-the-air signals, a very easy standard that over 90% of all cable markets could meet. The act also allowed cities to receive up to 5% of the operator’s revenues in an annual franchise fee and made some minor concessions in mandating “leased access” channels to be available to groups desiring to “speak” via cable television.

Additional reforms guaranteed pole attachment rights to the cable industry so they could wire and service their network unencumbered by utility company interference or high pole attachment fees.  Cable consolidation allowed formerly mom and pop cable systems to become part of a cable industry where just a handful of cable companies provide service to the majority of cable households.  Countless millions are spent each year by the industry to lobby state and federal governments to keep the party going without regulatory interference, suggesting competiti0n alone is the only regulation required.

Except when a new competitor enters the market, of course.  Fearing competition from municipal providers who will force cable and phone companies to charge reasonable rates and upgrade service, the best possible solution is to find a way to ban such projects.

Forcing regular referendums and the complexities and expenses associated with them guarantees no community in North Carolina would ever bother with the onerous requirements to launch municipal broadband projects.

That’s not just Jay and I saying that.  What Hoyle has proposed hardly breaks new ground.  It’s the same dog and pony show the industry has brought to other states to stop competition and keep prices high and service slow.

So let’s learn from the painful experiences of others:

First lobbying for legislation requiring referendums and then winning it, SBC (later AT&T) and Comcast used the opportunity to spend more than $300,000 of their subscribers’ money to launch a major misinformation campaign with misleading and inaccurate mailers that successfully fought off a proposition to deliver better and cheaper service through a municipal broadband project in Batavia, Geneva, and St. Charles, Illinois.  Fiber for Our Future documented the whole sordid affair from start to finish as a lesson to others confronting industry-backed referendum requirements.

[flv]http://www.phillipdampier.com/video/unproven.flv[/flv]

Want a preview of the distortion and misinformation-campaign cable and phone providers will bring to stop municipal broadband?  Watch this SBC (today AT&T) executive tell city officials in Illinois that fiber is “unproven,” that the phone company’s DSL speeds are comparable to Comcast Cable, and that consumers don’t need the 3Mbps speed the company was delivering back in 2004 when this video was taken.  “What are you going to do with 20 megabits.  I mean, it’s like having an Indy race car and you don’t have the race track to drive it on.”  (3 minutes)

Longmont, Colorado spent years suffering with bad broadband service from Comcast and Qwest and sought a better alternative with a municipally-run provider.  But then the cable and phone giants spent $200,000 to put a stop to that.  While local subscribers may have preferred that $200,000 be used to reduce their rates, for Comcast and Qwest it was an investment in maintaining future pricing only duopolies can achieve, all while delivering “good enough for you” broadband service to Longmont residents.  In 2006, the Baller Herbst Law Firm collected information on industry-backed barriers to municipal broadband, and the list went on for nine pages.  Many of them sound eerily familiar to what Hoyle proposes (after cable and phone companies whispered time tested, industry proven ideas into his ear).

The city of North St. Paul, Minnesota has advice for states like North Carolina after their own experience with a coordinated industry-backed smear campaign against municipal broadband enabled by legislation similar to what Hoyle proposes:

What should be of interest to all communities was the organized opposition.  It appears that the incumbent providers, industry associations and politically conservative think tanks teamed up to promote negative news stories, do polling and opposition phone calls, provide transportation for identified “no” voters and create web sites.

While we heard some advocates lamenting this high priced anti-municipal fiber effort, this response is something that community leaders must expect and be prepared for.  A strong community education and mobilization effort must be a part of any municipal telecommunications initiative.  A coalition of business owners and residents must be created and maintained that can counter the expected efforts of the incumbent providers.  The benefits of the community-owned network should be documented and promoted so that an overwhelming majority of voters will choose to vote yes.  We hope that, one way or the other, North St. Paul gets the “More, Better Broadband” that the MN Broadband Coalition supports.

Of course, when local communities are banned from spending a nickel on advocacy for their projects, it effectively hands a restraining order to broadband advocates who can’t even get on the playing field, level or otherwise.

Outraged yet?

It will only get worse if Hoyle’s bill ever becomes law.  Residents in communities like Salisbury endured a sampling of the kind of negative campaign this industry will launch wherever municipal broadband competition threatens to appear.  In 2009, residents were hassled with push-polling phone calls from industry-backed astroturf groups claiming to represent ordinary citizens, but were actually little more than sock puppets for big telecom.  Your mailbox will be filled with blizzards of misleading mailers that current cable and phone customers pay for.  If they need more money, they can always raise your rates to cover the difference.  In the end, with the help of elected officials who don’t care about North Carolina consumers, existing municipal projects can bleed themselves dry (later to be used by the industry as “failed examples” to claim such projects are too risky to try) and proposed ones will never see a spade plunged into the soil to bury the first strand of fiber optic cable.

But it’s not all bad news.  It doesn’t have to happen this way.  You can tell your state representative you are watching them like a hawk on this issue.  Any “yes” vote for legislation like that proposed by Senator Hoyle is a no vote for them at the next election.  Let them know you are well aware of the game plan here — it has been tried in other states with similar legislation that is little more than protectionism for big telecom. Tell your elected officials you already have the power to choose whether or not you want these projects simply by voting for or against the elected officials that propose them.  While the concept of a referendum sounds fair on the surface, it’s not when you consider the past experiences of other communities who faced well-funded opposition campaigns, helpless to correct the record or fairly argue their position on the matter.  Providers know that, which is why they advocate this type of legislation in the first place.  It effectively stops competition, stops better service, and stops North Carolina residents from enjoying lower priced cable, phone, and broadband service.

There are a few stand-up representatives of the people of North Carolina who do deserve our gratitude and thanks today.

Rep. Paul Luebke, (D-Durham County) (who co-chairs the Revenue Law Study Committee) [email protected] 919-733-7663 College Teacher

Rep. Jennifer Weiss, (D-Wake County) [email protected] 919-715-3010 Lawyer-Mom

They both will likely face fierce opposition from the incumbent providers and their fellow legislators. Please take the time to thank them for standing with consumers today and for trying to protect the future of North Carolina and its economy.

Stop the Cap! will have video of today’s remarks by both legislators soon.  We hope to follow with a complete video record of today’s events surrounding the anti-competition legislation proposed by Senator Hoyle.  It will serve as a testament to just how much work we have to do to remove legislators who have stopped representing the public interest, and renew our support for those who stand with consumers.

Meanwhile, check out these two delightful pieces paid for by the cable and phone industry, sent to homes where municipal broadband projects faced a referendum in 2003 and 2004.  More than a dozen different mailers were sent to every home in the communities of Batavia, Geneva, and St. Charles, Illinois from phone and cable companies.  Now imagine the repercussions when not one of those communities could respond with their own mailers correcting the record and giving their side of the argument.  There is a reason why special interests spend enormous sums of money to protect their turf, and the battle is over before it even begins when those interests demand the other side not have the opportunity to respond in kind.

What smears do providers in North Carolina have in store for you?

… Continue Reading

Get out your tiny violins.  Telephone and cable companies that have ignored your neighborhood for years are decrying attempts by the federal government to fund projects that would finally extend broadband service to rural America.  Companies ranging from tiny Eagle Communications in Kansas, to major regional telephone companies like FairPoint Communications and Windstream, are upset that new providers are on the way to deliver broadband service to bypassed homes or communities stuck in their broadband slow lane.

The Associated Press reports coast-to-coast complaints from incumbents who have refused to deliver service or force customers to accept 1-3Mbps speeds indefinitely.

From the Blue Ridge Mountains to the Great Plains, some local phone and cable companies fear they will have to compete with government-subsidized broadband systems, paid for largely with stimulus dollars. If these taxpayer-funded networks siphon off customers with lower prices, private companies warn that they could be less likely to upgrade their own lines, endangering jobs and undermining the goals of the stimulus plan.

That’s rich coming from some providers who threaten to refuse to upgrade lines they’ve never upgraded, endanger employees they’ve long since cut, and threaten their quest for monopoly profits serving rural Americans larger carriers are rapidly abandoning.

Anemic Broadband Is Not in Kansas Anymore

Rural Telephone's Exchange Map (click to enlarge)

Kansas-based Eagle Communications provides cable and wireless broadband service to more than a dozen small towns in the state.  For more populated areas, it’s cable broadband service.  For the rural parts of its service areas, Eagle relegates everyone to a slower speed, more expensive wireless network.

The company is upset to learn about additional expansion forthcoming from Rural Telephone Company, a cooperative which recently won a $101 million stimulus grant to construct a fiber optic system to expand service.  With the grant, the co-op phone company will move beyond its currently constrained DSL broadband network into areas even Eagle’s rural wireless signal won’t reach.

Rural Telephone Company says their broadband grant will provide service “in an area 99.5 percent unserved/underserved and provide a rural infrastructure required for economic stability, education and health care.”

Eagle says it’s unfair competition.

“It is extremely unfair that the government comes in and uses big government money to harm existing private businesses,” Gary Shorman, president of Eagle Communications, told the AP.  “This hurts our company.”

“It’s a little disappointing that companies that aren’t adequately serving these areas are trying to undercut those of us who are trying to step in and get the service where it’s needed,” says Lawrence Strickling, head of the National Telecommunications and Information Administration, the arm of the Commerce Department handing out much of the stimulus money.

The $101 million Kansas project, for instance, will bring connection speeds of up to 1 gigabit to businesses and up to 100 megabits to as many as 23,000 homes. While the network will cover the population center of Hays, where both Rural Telephone and Eagle Communications already offer broadband, that accounts for just eight of the 4,600 square miles to be reached. Much of the area has no broadband at all, says Larry Sevier, Rural Telephone’s chief executive.

The goal is to “close the digital divide between Hays and the outlying areas,” says Jonathan Adelstein, head of the Rural Utilities Service, which awarded the money.

Eagle Communications' Wireless Service Area - Central Region (click to enlarge)

For rural Kansans choosing between Eagle’s wireless service or Rural Telephone’s current maximum 1.5Mbps DSL service for those outside of the Hays city limits, the definition of “high speed service” maxes out at an anemic 3Mbps:

Eagle Communications Wireless Network Pricing – Hays, Kansas

• Eagle 256/256 $34.95 /per month
• Eagle 768/512 $37.95 /per month
• Eagle 1.0/384 $44.95 /per month
• Eagle 2/512 $54.95 /per month
• Eagle 3/512 $59.95 /per month

Rural Telephone Company Pricing for Outside the City Limits – Hays, Kansas

• Rural Telephone’s 1.5Mbps DSL — $29.95 per month
• Rural Telephone’s 512kbps DSL — $19.95 per month

Gone With the Windstream: Phone Company Says Broadband Stimulus Doesn’t Give a Damn About Their Georgia Business Model

Many of the projects seeking funding don’t actually want to get into the Internet Service Provider business, preferring to construct fiber-based networks available equally to all-comers at wholesale pricing.  Sure they’ll wire government buildings, schools, and libraries as a public service, but their real goal is to make available super high speed networks that incumbent providers haven’t, under the theory a rising tide lifts all boats.  They even invite existing ISP’s to hop on board, buying access to deliver improved service to their existing customers.

But because some providers don’t own or control the infrastructure outright, they’re not interested.

One such project is the North Georgia Network Cooperative, created from a consortium of private business advocates, a state university, and two power company co-ops.

North Georgia sees broadband as a major economic stimulant… if they actually had it.  Large parts of the region don’t, so the Cooperative applied for and won a $33.5 million NTIA grant to construct a 260-mile fiber ring running through 12 counties in the state.  The network will easily deliver connections upwards of 10Gbps for institutions and broadband speeds far faster than incumbent DSL provider Windstream currently provides across the region.

Windstream's biggest promotional push is for its 6Mbps DSL service

Windstream’s DSL packages look better than many other independent phone companies, at least based on their website.  Windstream offers 3, 6, and 12 Mbps DSL packages across northwestern Georgia,  but that doesn’t mean you can actually obtain service at those speeds.  Stop the Cap! reader Frederick, who tipped us off to this story, notes that he can’t obtain more than 1.5Mbps DSL service from his home in Dalton, Georgia because the phone lines in his area won’t support faster speeds.

“I’m actually less than a mile from my area’s central office, but because the phone lines in my area are deteriorated, they had to lock my speed in at 1.5Mbps — anything faster causes the modem to reset,” Frederick writes.  “Windstream does the same thing to my cousin in Lafayette, who was offered 6Mbps service but can only get 3Mbps in reality.”

Frederick says most people in the community don’t really care where the faster broadband comes from — just that it comes.

“If Windstream, who incidentally also applied for government money, could do it there would have never been a need to go around them in the first place,” he says. “Hell, the ironic part is the Cooperative will sell wholesale access to Windstream to use as it sees fit, but because Windstream doesn’t own it they’re pouting, refusing to participate.”

Windstream says it has already invested $5 million in network upgrades covering northern Georgia over the last three years and the Cooperative’s stimulus grant undermines the economics of that investment.  Michael Rhoda, Windstream’s vice president of government affairs told AP Windstream now has to share rural customers with a government-funded competitor.  Windstream wants that funding limited strictly to those areas where broadband service is uneconomic to provide.  To underline that point, the company has applied for $238 million in stimulus funding to reach the “last 11 percent” who don’t have broadband in Windstream’s service areas.

Maine’s Three Ring Binder Project Snaps Shut on FairPoint’s Monopoly Fingers

Maine's Three Ring Binder Project plans to serve most of Maine (click image for additional information)

More often than not, independent efforts to launch improved broadband service in a region come after years of dealing with an intransigent provider comfortable moving at a snail’s pace to improve service.  Financially-troubled FairPoint Communications has been struggling to meet Maine’s broadband needs since the company took over service from Verizon two years ago.  The state government, university, and smaller telecommunications companies decided they could do better — applying for, and winning a $25.4 million dollar grant to construct three fiber rings across the state.

FairPoint insists the project duplicates the company’s own efforts to improve connectivity in Maine and has appealed to lawmakers to stop the project.  But FairPoint recently called a truce when it reached a deal to charge users of the new network a usage fee, with FairPoint getting a large share of the proceeds to expand its own broadband efforts.

[FairPoint’s financial problems have left the company] unable to bring broadband to wide swaths of rural Maine, says Dwight Allison, chief executive of Maine Fiber Co., which was created to build and operate the stimulus-funded network. The project, he says, represents a serious competitive threat to a company that “feels its monopoly is being attacked.”

Of course nothing precludes FairPoint from getting access to the new fiber network at the same wholesale pricing other providers will pay, but the company so far doesn’t seem interested.

Various talking points designed to derail the project are debunked by the Maine Fiber Company:

• Fiction: It’s government-run broadband.
• Fact: Three Ring Binder will be owned and operated by Maine Fiber Company, a private company based in Maine. MRC is unaffiliated with any telecom carrier to ensure fair and equal access to the system for all competitors.

• Fiction: This project will create unfair competition for private providers.
• Fact: MFC will be a wholesale provider of dark fiber, and its customers will be Internet Service providers, wireless carriers, and telephone companies. MFC will not provide “lit” service in competition with private broadband carriers. MFC is required to provide service on an open access and non-discriminatory basis. All carriers in Maine will be able to use the network to serve their customers in Maine, resulting in robust competition for the benefit of Maine consumers.

• Fiction: This project duplicates service FairPoint already provides.
• Fact: Prior to receiving a federal stimulus grant, the project was carefully reviewed by the National Telecommunications Information Agency (NTIA) of the US Department of Commerce to determine whether there was overlap with existing carriers. NTIA determined that TRB would substantially improve access to high-speed Internet access in rural Maine. If material duplication had been discovered, TRB would not have been funded. TRB will offer a mid-mile, dark fiber service that is fundamentally different from what currently exists in rural Maine. In fact, carriers seeking to obtain dark fiber service along the TRB route have routinely been denied access by incumbent fiber providers.