Subscribe[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/BBC News Google Fiber Can ultra-fast internet change a city 2-27-12.flv[/flv]
The BBC explores how Google’s gigabit broadband project will change Kansas City economically, socially, and culturally. (3 minutes)
While incumbent phone and cable operators often try to directly block community broadband projects, sometimes politics and special insider interests also get in the way. One of our loyal readers shared a piece with us published in Fierce Telecom that outlines the trouble spots:
Gov. Bobby Jindal Blows It for Louisiana; Wife’s Foundation Heavily Supported By AT&T
Jindal's wife's charity is a recipient of AT&T money.
The U.S. Dept. of Commerce awarded $80.5 million to help drain Louisiana’s broadband swamp with a new statewide fiber network linking the most rural and poor areas of the state, including schools, libraries, hospitals, and universities. Users could have obtained service from 10Mbps-1Gbps, but not if Jindal had his way. He preferred AT&T (and the state’s cable operators) handle everything the same way they have traditionally handled telecommunications in the state — service in big cities and next to nothing everywhere else. In addition to directly supporting the governor, AT&T contributes substantially to a charitable foundation founded by Jindal’s wife.
Jindal never openly blocked the project. Instead, his administration “dithered and bickered” over the fiber network and ran the clock out. Last October, the Commerce Department revoked the grant, leaving Louisiana’s Broadband Alliance with little more than a plan they’ll never be able to implement as long as Jindal occupies the governor’s office. Stop the Cap! covered the mess back in November.
Public Service Commissioner Foster Campbell:
“We want to know what the heck happened; we’re the only ones in the country that dropped the ball,” Campbell said. “I meet with people in every parish, and the number one priority by far is high-speed Internet, and how do you lose $80 million coming from the federal government to do that. How do you drop the ball, and if they did drop the ball was it because someone whispered in their ears, ‘it’s going interfere with big companies?’”
AT&T-Backed Astroturf Operation Scandalizes the Mayor’s Office and Ruins A High Tech Training Program
Marks
As Stop the Cap! wrote last fall, a scandal involving AT&T and the mayor of the state capital of Florida ultimately cost the city of Tallahassee a $1.6 million dollar federal broadband grant to expand Internet access to the urban poor and train disadvantaged citizens to navigate the online world.
Mayor John Marks never bothered to inform the city he had a direct conflict of interest with the group he strongly advocated as a participant in the grant project. The Alliance for Digital Equality (ADE) is little more than an AT&T astroturf effort — a front group that did almost nothing to bring Internet access to anyone. Mayor Marks was a paid adviser.
After the media got involved, the mayor’s office hoped the whole project would just go away. And it did, along with the $1.6 million.
Wisconsin Republicans <Heart> AT&T, Even When It Means Forfeiting $23 Million for Better Broadband
Wisconsin Gov. Scott Walker is a close friend of AT&T. So close, when the phone company was threatened with the loss of revenue earned from the institutional broadband network it leases to the state, Walker and his Republican colleagues intervened, literally turning away $23 million in government stimulus funding. Walker alone has accepted more than $20,000 in campaign contributions from AT&T. Stop the Cap! covered this story in detail in February 2011.
Governor Walker (R-AT&T)
The decision to return the money had a direct impact on 380 Wisconsin communities, 385 libraries, 82 schools, and countless public safety offices across the state. Namely, being stuck with AT&T’s outdated and expensive network the state leases in successive five year contracts. Since broadband stimulus funding requires the construction of networks designed to last 20 years, not five, Walker’s insistence on sticking with AT&T made the stimulus funding off-limits. But what are friends for?
AT&T has historically had no trouble getting its phone calls returned by Republican state lawmakers, who have cheered most of AT&T’s proposed legislation through the state legislature. Today, Wisconsin takes a “hands off” approach with the state’s cable and phone companies, passed a statewide franchising bill that stripped oversight away from local communities, and AT&T’s landline network faces little scrutiny in the state, especially in rural communities.
The state university is now attempting to bypass Walker with its own $37 million project, but it will never serve Wisconsin consumers. The institutional network will target schools, hospitals and first responders.
As Fierce Telecom notes, other communities could face the loss of their stimulus funding if they do not get busy building the projects they promised. The Rural Utilities Service, part of the U.S. Dept. of Agriculture, has put several projects on notice they could forfeit broadband stimulus funding if they fail to meet project deadlines.
Nearly one year ago, Google selected Kansas City, Kansas as the first city to “Think Big With a Gig,” a gigabit fiber to the home broadband network that would shatter misconceptions that Americans don’t need lightning-fast broadband speeds.
In the original announcement, early 2012 was slated to be the target date for the service to become available in at least some areas of the city. After months of wrangling with utility companies and the city government, Google began burying the first fiber lines earlier this month. This week, it filed for permission with both Kansas and Missouri officials to compliment its forthcoming broadband service with a complete cable-TV package as well.
Google’s fiber project now has incumbent operators on both sides of the Missouri and Kansas Rivers concerned about forthcoming competition from the search engine giant, especially after Google announced it would wire both the Kansas and Missouri sides of the city.
Greater Kansas City is primarily served by Time Warner Cable and AT&T, but smaller cable operators also offer service in some areas. Google is considering a competitive cable package with video on demand. It is expected to wrap up licensing negotiations with programmers within a month or two, and some of its contracts allow Google to sell cable service outside of the Kansas City area, a potentially interesting development should Google want to provide an Internet-based cable system to subscribers in other cities.
We have collected several media reports on the Google project in Kansas City to bring readers up to date:
[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WDAF Kansas City Gigabit Challenge Offers Google-Friendly Ideas 12-6-11.flv[/flv]
WDAF in Kansas City reports on some of the submissions to Google’s Gigabit Challenge — a competition to consider how to leverage 1,000Mbps broadband. (12/6/11 — 2 minutes)
[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WDAF Kansas City Why is Google Fiber Set Up Taking so Long 1-18-12.flv[/flv]
WDAF reports on what is holding up the Google Fiber project. It turns out local utilities have been harder to deal with than originally thought. (1/18/12 — 3 minutes)
[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/KMBC Kansas City Google Begins Fiber Installation In KCK 2-6-12.flv[/flv]
KMBC reports Google is ready to break ground on its new fiber network. (2/6/12 — 2 minutes)
[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/KCTV Kansas City Google Starts Laying Fiber 2-18-12.mp4[/flv]
KCTV says Google started laying fiber this week. The new service is on the way. (2 minutes)
Frontier Communications faced unhappy investors Thursday after announcing it was slashing its dividend nearly in half in an effort to raise money to sustain the company’s cash flow and reduce its debt.
The company’s earnings fell 8.1% as customers continued to leave for the competition, seeking better service and lower prices.
The poor earnings results and the dividend cuts delivered a one-two punch to Frontier stock, which slid to $4.20 a share, down 16 percent in the last three months.
Among Frontier’s biggest challenges remains the quality of its broadband service to customers. Where competition exists, Frontier DSL continues to lose the speed battle, and recent junk fees padding customer bills, including a “High Speed Internet surcharge,” and increasing modem rental fees have alienated some customers.
Frontier’s chief operating officer and executive vice president Dan McCarthy told investors 83 percent of Frontier’s service area has access to the company’s broadband product. However, fewer than 20% of Frontier’s customers have access to speeds as high as 20Mbps. Only just over half can access the Internet at 6Mbps. Many of Frontier’s customers can only access lower speed service (66% can choose 4Mbps, 76% — 3Mbps, and the rest 768kbps-3Mbps).
“We’ll be investing throughout the year to improve speed-reaching capability in all our markets,” McCarthy told investors on a conference call last week.
In the second half of 2010, Frontier is expected to increase the amount of Ethernet in its middle mile network, which McCarthy expects will allow the company to deliver faster speeds over VDSL2 and VDSL2 bonding as means of driving both speed increases in the residential and the commercial markets.
However, Frontier’s preoccupation with an internal system conversion, to integrate its acquired Verizon service areas with the rest of its network, has stalled much of the company’s marketing. Promotions, in particular, have been anemic over the last several months and will likely remain that way until later this year. Where competition exists, cable operators have successfully been picking off Frontier’s customers.
As with similar Verizon landline sales in the past, initial revenue growth from acquired customers starts out high, boosting revenue numbers and often the value of a company’s stock. But the heavy debt load incurred from acquisitions and ongoing line losses to the competition eventually take their toll, and Frontier’s revenue now reflects the reality of a company trying to sell more services to a declining number of customers.
Morningstar notes the company’s debt problems are significant:
Frontier has struggled to bring leverage down and hasn’t successfully placed new debt since closing the Verizon transaction in 2010. Management has talked about taking care of the $580 million maturity it faces in early 2013 for the better part of a year, with no result to date. Yields on the firm’s existing debt have increased over the past year, despite the sharp decline in Treasury rates.
Standard & Poor’s Ratings Services reduced its outlook on the company from stable to negative, noting the competition is increasingly hurting Frontier’s capability to raise revenue.
The company’s decision to slash its dividend in an effort to reduce debt has created consternation for some investors who stuck with the company when the share price was above $7 and the dividend was declared safe for two years. Neither seems to the be case any longer.
This influential documentary explores the rural cooperative movement for electricity in the 1930s.
In 1935, just 5-10 percent of America’s family farms were wired for electricity. The cities: lighted. The rest of the country: in the dark. It was the same old story then as it is today for rural broadband:
Private providers delivered electricity to big cities, but found the countryside not worthy of their time or investment. Then, as now, rural America’s economy suffered for it. Back in 1935, family farms coped with wood-fired stoves, school homework by kerosene lamp, discarding fresh farm products that could not be kept cool, no running water, no radio, and no appliances to make an already difficult life a bit easier to manage. In 2012, an increasing amount of the rural economy is moving online, where raw materials and goods are bought and sold, where knowledge-based jobs require a dedicated broadband connection, and education means completing homework assignments and doing research on the Internet.
Same old problems cast in a different light to be sure, but borrowing from America’s past may put a down payment on our broadband future.
President Franklin D. Roosevelt had heard all of the excuses and seen private electric companies try to showcase their minor efforts to improve power in rural America. A series of small scale projects that looked good in the newspaper could not hide the more general attitude it was unprofitable to provide the service to family farms. In 1935, Roosevelt signed an executive order establishing the Rural Electrification Administration (REA). Although FDR’s contemporary critics like to consider him a socialist that interfered in the private economy, in fact Roosevelt’s REA spent the majority of its effort in areas commercial providers wouldn’t touch with a 25-foot power pole.
The idea was simple. Rural American communities with limited or no electric service could reach out to the REA to obtain low interest loans to finance the infrastructure to construct rural electric service. When loans were approved, a cooperative electric company was established, with each “customer” being a member and part-owner of the co-op. Income earned from ratepayers would pay for the service and pay back the government loans. When the federal government was paid in full, the cooperative owned the new utility company outright.
In practice, this was the only way rural Americans, especially farmers, could obtain electric service. These cooperatives often found they could deliver the same service a private company could, and for much less money. Co-ops work for the benefit of their members, not for outside investors.
[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Power and the Land.flv[/flv]
In 1940, the federal government commissioned ‘Power and the Land’ through the United States Film Service. This one film, showing life for a farm family in southeastern Ohio before and after electrification, helped drive the rural electrification movement forward in areas yet to be wired for service. The first 17 minutes chronicles life on the powerless farm, while the second half explores the REA electrification program and the changes electricity brought to farming life. (38 minutes)
Belmont County, Ohio shows the legacy of the REA. Diagonal line-shaded sections illustrate the service areas of the original power co-op noted in the film 'Power and the Land.' The yellow shaded areas are served by Ohio Power, a subsidiary of American Electric Power, Inc., a commercial company.
The film’s impact was profound (the Village Voice called it “a little masterpiece”), and more than four million farmers were estimated to have seen it. Eventually, more than 500 miles of electric lines were being strung by America’s co-ops every single day. Additional documentaries about the film were made decades later, narrated by Walter Cronkite, to chronicle the cooperative electricity movement, the original film, and what happened to the family.
Private providers were, of course, horrified by the REA and other Roosevelt Administration public works projects. Private companies railed they were being undermined by low interest government loans, government involvement, and fear new regulations would threaten their profitable business models. Some of Roosevelt’s fiercest critics called the administration’s zeal for public-good spending anti-capitalist and anti-American. For Roosevelt, it was often simply a matter of finding the fastest solution to a pervasive problem private companies seemed uninterested and unwilling to solve.
The legacy of the REA remains plainly visible today. In Ohio, what started as the Belmont Power Cooperative is today part of the South Central Power Company, itself a co-op within the Touchstone Energy Cooperative. Belmont County, Ohio’s power grid still reflects the work of the REA in the 1930s, with the county divided into regions served by the original REA co-op and Ohio Power.
While South Central Power hasn’t gotten into the broadband business, several other rural co-ops have, expanding their focus towards fiber to deliver cable TV, Internet, and phone service.
If the concept of the REA was adopted for broadband, the formula for success can remain the same. Low interest loans to finance fiber telecommunications networks provide limitless expansion possibilities and a clear path to solving rural America’s broadband inferiority problem. Interest rates have never been lower, and by gradually repaying the loans from income earned from subscribers, taxpayer dollars are not at risk. The federal government’s only real involvement in guaranteeing loans and providing oversight that the money is spent appropriately. The co-ops that result will govern themselves by and for their members.
Some will say electricity is more important than broadband, and for some families that may be as true as similar arguments were for and against REA electricity in the 1920s and 30s. But take a week off from your broadband service. Disconnect it, don’t read e-mail or visit websites, and then re-evaluate that statement.
More and more, broadband has become a firmly established part of our lives at work, school, and home. If private companies won’t step up, let others organize to provide it.
[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/North Carolina Farmers Utilizing the Internet America’s Heartland.flv[/flv]
Fast forward to December 2011, and watch how rural Rutherford County, N.C. farmers are adapting to the new digital economy with the use of broadband. They are selling their crops online to eager restaurants, markets, and other buyers up to 70 miles away. No broadband? No deal. (5 minutes)
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