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.

The national map of available white space channels show plenty are available in rural areas, but designing an urban network might prove challenging because open channels often just don’t exist. In a medium-sized city like Rochester, only 11 UHF channels are available, a number likely to dwindle to close to zero if the FCC successfully reallocates much of the UHF band to wireless providers like AT&T and Verizon.

A dozen homes in the middle of the Adirondacks now have access to Internet speeds far faster than what Verizon and Frontier DSL can deliver and without the usage caps or speed throttling common with satellite Internet access.

Thurman, N.Y.’s public-private “white space” wireless network survived months of political wrangling, debate, and even intentional signal interference created by someone intent on disrupting the project. For a community that some maps depict with zero residents, the 1,200 people of Thurman are now more known than ever, winning national attention for one of the first next generation rural wireless networks to use unused space on the UHF dial to provide Internet access.

A dozen homes are the first to receive the service, with nearly 80 more on the way during phase one of the project. A $200,000 New York state broadband grant helped get the project off the ground and defray the cost of equipment installed in each subscriber’s home. But the initial cost isn’t cheap, even with the grant. New customers pay an upfront equipment fee of $292 for a receiver that costs the project up to $600. The monthly service charge is $50. Despite the price, it’s worth it to a lot of subscribers.

“The white space service is truly amazing,” said John Schroeter of Kenyontown, noting he uses the Internet for genealogical research and relied on dial-up access for the last 15 years. “I can go from one web page to another without waiting forever.”

Schroeter told Denton Publications that web pages often failed to load with dial-up, even after hours of waiting. Now he can manage to complete days of research in about an hour, without having to drive 15 miles to the nearest Wi-Fi hotspot.

Despite the fact Verizon and Frontier Communications both run their own fiber cables on the same utility poles in the region, at least 75% of the 400 homes in Thurman have no access to broadband Internet, living out of reach of even basic DSL. Many end up in the parking lot of the town hall to use Wi-Fi. Others depend on prohibitively expensive satellite access. None of the existing options were ideal. Sheila Flanagan, proprietor of Nettle Meadow Farm complained it took her hours to prepare even a small number of shipping labels to send her cheese products across the country with UPS. Speeds were so slow, she was forced to drop Williams-Sonoma as a client.

The concept of white space wireless Internet access has already taken hold in Europe but has dragged in the United States as existing UHF television stations, wireless carriers, wireless microphone manufacturers and others who use the same frequencies white space data services also depend on defend their turf. Since white space services are unlicensed and intended for two-way communications, fears that Internet users would degrade wireless microphones or TV reception meant special care had to be taken to lower the potential for interference.

Since rural areas lack a crowded television dial, are often outside of the coverage areas of wireless carriers, and are unlikely to host many wireless mics, white space broadband would seem like the natural solution.

The project in Thurman faced a number of obstacles to overcome anyway. There were philosophical objections from tea party conservatives who objected to tax dollars paying for the “luxury” of Internet access when satellite service is available. Some residents wanted a fiber to the home solution, one that was likely financially out of reach for the small community. Still others wanted the money spent on a fiber link between the town and Time Warner Cable, that might then be enticed to wire homes in the rural community. In the end, the community decided to go ahead with an advanced wireless network, citing a number of factors familiar to many living in rural areas:

1. Since the town is located entirely within the Adirondack Park, there are prohibitions on placing communications towers on nearby peaks or other high spots that could spoil the view;
2. The heavily forested and mountainous area made a traditional Wireless ISP project difficult because those networks need line of sight communications. White space wireless signals easily penetrate through trees and can stay intact across hilly terrain;
3. Although not as bandwidth capable as fiber optics, white space networks are capable of delivering 10Mbps broadband per UHF channel. Most networks bond multiple UHF channels together to support even faster speeds and expand capacity;
4. The chances of creating interference for other spectrum users was low in Thurman, which is a four-hour drive from New York and far enough north of Albany to avoid interfering with signals from the state capital. Even wireless carriers hug their cell towers along I-87, a respectable distance away;
5. The network has redundant backhaul access to fiber from both Verizon and Frontier, neither of which show the slightest interest in expanding services into the community on their own;
6. The grant was limited in scope and white space broadband qualified so it proved the most economical choice for a community that was no stranger to fights over money, engaging in political battles over issues like the cost of building a salt shed and auditing the on-hand count of trash bags.

The Thurman white space broadband project hides base station antennas in the tree canopy.

Tests provided the project managers with an idea where to place needed wireless antennas, often hidden within tree canopies. But at least one disgruntled resident made a point of creating intentional interference on the channels the project managers were testing, committing a federal offense along the way. That was quickly overcome and the equipment has been placed and will soon be joined by installations in nearby neighborhoods, broadening the reach of the service.

Recent advancements in white space technology have also allowed speed and capacity to improve dramatically. Equipment now transmits its exact GPS-identified location to a national database which sends back an authorized list of “white space” channels each transmitter can use to provide the service. If a new licensed broadcaster takes to the airwaves, a database update will lock out that channel in the area, preventing interference.

Although exact speed data was not available at press time, Sally Feihel demonstrated she could successfully stream an episode of a classic Andy Griffith Show on her iPod at the same time a videoconference was underway and someone else was downloading a movie, all without skipping a beat. In fact, there is so much speed and capacity built into the system, its managers say speed throttles and usage caps are completely unnecessary.

Most users agreed the wireless network far outpaced satellite and DSL and some believed it was even faster than Time Warner Cable Internet access they experienced elsewhere. (Time Warner Cable doesn’t come near the community today.)

Constructing the network only took several months, but the politics that often surrounds public-private initiatives and the need for grant funding in income-challenged rural America can tie up projects much longer than that. The need for decent and affordable Internet access often will cross party lines, especially in rural communities.

New York’s state broadband expansion fund could help expand similar projects to other bypassed areas of the state. That investment may actually save taxpayers from paying high broadband bills indefinitely.

Residents are eagerly waiting for the next expansion to begin down Valley, Garnet Lake and Glen-Athol Roads. Moving beyond that may take more grant funding.

“White space is saving us $90 per month, and it’s far faster than satellite ever was,” another resident said.

[flv]http://www.phillipdampier.com/video/MetroFocus A New way to Bring Broadband to Rural Towns in Upstate New York 2014.mp4[/flv]

MetroFocus showed the initial planning and testing phases of Thurman’s new white space wireless network, including interviews with town officials and a tour of the community. (4:23)

[flv]http://www.phillipdampier.com/video/Dynamic Spectrum in Action How TV White Space Devices Work.mp4[/flv]

TV white space wireless broadband networks are designed to avoid interference with other licensed spectrum users. See how the technology works in this short video. (2:27)

The Federal Communications Commission, over loud objections from America’s largest cable and phone companies, has raised the minimum speed necessary to qualify as “broadband” from 4/1Mbps to 25/3Mbps.

Broadband deployment in the United States – especially in rural areas – is failing to keep pace with today’s advanced, high-quality voice, data, graphics and video offerings, according to the 2015 Broadband Progress Report adopted by the Federal Communications Commission.

Reflecting advances in technology, market offerings by broadband providers and consumer demand, the FCC updated its broadband benchmark speeds to 25 megabits per second (Mbps) for downloads and 3 Mbps for uploads. The 4 Mbps/1 Mbps standard set in 2010 is dated and inadequate for evaluating whether advanced broadband is being deployed to all Americans in a timely way, the FCC found.

Wheeler

Using this updated service benchmark, the 2015 report finds that 55 million Americans – 17 percent of the population – lack access to advanced broadband. Moreover, a significant digital divide remains between urban and rural America: Over half of all rural Americans lack access to 25 Mbps/3 Mbps service.

“The FCC doesn’t just have a statutory obligation to report on the status of broadband deployment; we have a duty to take immediate action if we assess that the goal of deployment to all Americans is not being met,” said FCC chairman Thomas Wheeler. “And act we have.”

The 3-2 party line vote left the FCC’s two Republican commissioners Ajit Pay and Michael O’Rielly siding with the telecom industry.

Commissioner Pai even accused the FCC of aiding and abetting the Obama Administration’s larger plan to regulate the Internet.

“The ultimate goal is to seize new, virtually limitless authority to regulate the broadband marketplace,” Pai wrote in his dissent. “Under its interpretation of section 706 of the Telecommunications Act, the FCC can do that only by determining that broadband is not ‘being deployed to all Americans in a reasonable and timely fashion’ or, more colloquially, by ignoring the consistent progress in Internet connectivity that’s obvious to anyone with a digital connection and an analog pulse.”

Pai

Pai called the FCC decision “Kafkaesque,” claiming the agency’s recent activist approach on issues like broadband speed, Net Neutrality, and managing wireless spectrum to guarantee robust competition will result in cuts in broadband investment, raise the cost of deployment, and deter competition.

Pai believes the FCC is erecting barriers that will delay or even stop Verizon and AT&T’s plans to ditch rural landline service through a proposed transition to IP-based phone service in urban communities and wireless-only service in rural areas. He also complained about efforts by the FCC to regulate the Internet like a public utility, claiming “that is not what the American consumer wants or deserves.”

But Commissioner Jessica Rosenworcel countered maintaining the status quo and allowing the marketplace to set the agenda risks our digital future.

“I, for one, am tired of dreaming small; It’s time to dream big,” Rosenworcel said. “This is the country that put a man on the moon. We invented the Internet. We can do audacious things—if we set big goals. I think our new threshold should be 100Mbps. I think anything short of that shortchanges our children, our future, and our digital economy. I don’t think reaching a benchmark like this is easy—but nothing worthwhile ever is. Still, the history of technological innovation is rife with examples of the great depths of American known-how. It is time to put that know-how to work and use it to bring really big broadband everywhere.”

The FCC’s changed definition of what constitutes broadband could also have an impact on the current merger deal involving Comcast and Time Warner Cable now before the FCC and state regulators.

With the new definition in place, Comcast’s monopoly control of broadband service becomes more clear as fewer phone companies are able to meet the minimum speed standard to qualify as broadband competitors. Comcast will now control about 50% of all broadband homes in the country, a percentage that could reach even higher if Comcast revamps Time Warner Cable’s broadband tiers.

The report also highlights a growing digital divide on Tribal lands, in U.S. territories, and in schools. At least two-thirds of residents lack access to broadband on Native American reservations and in U.S. possessions including Puerto Rico, Guam, the Northern Marianas, U. S. Virgin Islands and American Samoa. More than one-third of all schools in the United States lack access to fiber broadband connections.

Key findings include the following:

• 17 percent of all Americans (55 million people) lack access to 25/3 Mbps service;
• 53 percent of rural Americans (22 million people) lack access to 25/3 Mbps;
• By contrast, only 8 percent of urban Americans lack access to 25/3 Mbps broadband;
• Rural America continues to be underserved at all speeds: 20 percent lack access even to service at 4/1 Mbps, down only 1 percent from 2011, and 31 percent lack access to 10/1 Mbps, down only 4 percent from 2011;
• 63 percent of Americans living on Tribal lands (2.5 million people) lack access to 25/3 Mbps broadband;
• 85 percent living in rural areas of Tribal lands (1.7 million people) lack access;
• 63 percent of Americans living in U.S. territories (2.6 million people) lack access to 25/3Mbps broadband;
• 79 percent of those living in rural territorial areas (880,000 people) lack access;
• Overall, the gap in availability of broadband at 25/3Mbps closed by only 3 percentage points last year, from 20% lacking access in 2012 to 17% in 2013.

Phillip “I Want My Money Back” Dampier

For months, Time Warner Cable has deployed its legal team to prevent public interest groups from gaining access to the company’s exhibit of rural broadband buildout plans it had for New York, sent confidentially to the Public Service Commission as part of its proposal to merge with Comcast.

“This information would be difficult and costly for a competitor to compile, such that disclosure would significantly harm Time Warner Cable’s competitive advantage,” Time Warner Cable’s lawyers complained to regulators handling the case. “To allow competitors to have access to this information before Time Warner Cable has had a chance to market customers for which it speculatively built the line would not only negate any competitive advantage, it would allow its competitors to reap the benefits of Time Warner Cable’s investment, causing substantial competitive and financial injury to Time Warner Cable.”

“The compilation of information on all the Time Warner Cable New York deployments, distances, and passings into one document would be of enormous value to a competitor,” the lawyers added. “This information could not be developed independently by competitors, and any estimates developed through publicly available data or data from third-party sources, if possible at all, would be expensive and burdensome to assemble, and less accurate than the data provided in Exhibit 46. […] Therefore, disclosure of the compilation of information on the New York Rural Builds would cause substantial competitive injury to Time Warner Cable, and should be granted exception from disclosure.”

One might expect the mighty Exhibit 46 to contain all of Time Warner’s deepest secrets — secrets that if made public would hand the “competition” the keys to the cable kingdom.

Despite the haughty demands that such information was not to be shared with the public, Stop the Cap! secured our copy of the “top-secret” Exhibit 46 (and here is a copy for you as well).

After reviewing it, it quickly became clear the only thing Time Warner Cable intended to keep secret is how little expansion (and money) the company is devoting to rural New York. The nine-page spreadsheet shows Time Warner spent $5.3 million of New York’s money to expand service to, at most, 5,320 homes or businesses that had no access to cable before. The largest beneficiary of this expansion was the rural (and more affluent than its neighbors) town of Grafton, in Rensselaer County, where 1,152 homes now have access to Time Warner Cable if they want it. An additional 875 homes in Carlisle, Schoharie County now have access as well. Despite dire warnings from Time Warner, “competitors” are hardly rushing to the scene to engage in hand-to-hand combat with the cable company, which is the only provider of broadband service for many of these residents.

As for the rest of upstate New York, Exhibit 46 offers about as much relevance to “competitors” as it does to the rural residents still being bypassed by the cable company. Most of the entries show Time Warner’s expansion projects reached fewer than 10 homes in any particular area. In a large number of those instances, the expansion ended up serving just one additional home or business.

Some examples:

• Town of Clarence, Erie County – 4 homes or businesses
• Town of Henrietta, Monroe County – 1
• Town of East Bloomfield, Ontario County – 22
• Town of Paris, Oneida County – 1
• Town of Manheim, Herkimer County – 1
• Town of Kirkwood, Broome County – 7
• Town of Tupper Lake, Franklin – 116
• Town of Gouverneur, St. Lawrence County – 29
• Town of Brookfield, Madison County – 139
• Town of Jefferson, Schoharie County – 3
• Town of Big Flats, Chemung County – (either 2 or 4 – the entry is duplicated)
• Town of Pompey, Onondaga County – 1

Of the 5,320 homes or businesses now provided access to Time Warner service, 4,104 were subsidized up to 75 percent by the State of New York. Just 1,216 locations were apparently reached exclusively at Time Warner Cable’s own expense.

New Yorkers paid most of the bill because Time Warner Cable couldn’t find $5.3 million in their company coffers to bring broadband to rural residents. But Time Warner Cable could find $80 million to cover the golden parachute compensation package available to just one employee – CEO Robert Marcus, if the company is successfully sold to Comcast for around $45 billion.

Priorities.

No wonder Time Warner Cable’s attorneys fought so hard to keep the “expansion” effort a secret.

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.