Media Briefing on Broadband & Mobility

April 22, 2009

Free Markets vs the Public Interest

Recently a writer doing a story for a publication asked for my views on municipal broadband. Specifically, the questions were: “Should governments be doing this? Doesn’t that interfere with the free market? And wouldn’t private businesses provide better, more up-to-date service? 

Well, no surprise here, not one word of my response made it to the article. Actually, I was a little piqued because it’s parent company, the Heartland Institute, is so ardent in its defense of free markets while disparaging muni networks that I was sure they could withstand a little blunt critiquing of of their position. I guess not.

But I do feel I should share those thoughts with folks in the media because I’ve seen countless attacks on muni broadband via OpEd pieces and press releases that should be challenged. So here are my un-edited answers.

First, the municipal broadband movement started because the free market time and again failed to deliver vital services to potential customers. Make no mistake, the local governments are just as much customers as are local citizens and businesses. And as customers, if they cannot get what they want from what vendors or service providers want to sell them, they have every right to look elsewhere or make it themselves. Many small governments and then larger ones decided that they wanted to do it themselves, or build networks with business partners other than incumbent telcos.

Second, if a rightfully elected government, as a potential customer of particular services, decides it wants to get into a business to provide those services, then they answer to the citizens for that decision. I don’t remember in my civics classes where it said we as Americans have abdicated to the telecom companies our right to hold our elected officials accountable to the will of the people. *The people,* not just some incumbent’s shareholders.

Basically those officials work for us, and we the people are customers as much as government organizations. We can buy from whomever we choose and build whatever we want – or not – as people decide with their votes and their wallets. Therefore, all of the actions of telcos to prevent governments from taking actions that elected officials feel is in the best interest of their citizens seems pretty much counter to the ideal of democracy, an act made more repugnant by the telcos’ refusal to provide the services they try to sabotage.

Third, if you look at several of the municipally-driven projects that are in place, such as in Minneapolis, Metamora, IL or  Rutherford and Polk Counties in NC, private sector organizations have done the building and operating of the wireless networks, even when government has a partnership role. In most of the communities with these networks, private sector businesses are thriving, new ones are moving in and entrepreneurs are starting new ones, all in large part because of the network.

By this measure, free markets appear to be doing just fine. But it so happens that the government made these business activities possible because they fought off the attacks by a few large businesses – the large national telcos and cable companies – in favor of enabling the many local businesses to take root and grow.

It seems to me that government-owned or instigated muni broadband – fiber and wireless – may be anti competitive for large incumbents, but it’s very pro local business, and it’s very pro local consumers and education institutions and hospitals. Yeah, there are failures and there was a very silly business model pursued by local governments. But I accept those as the price for advancing the public good and common interests.

March 16, 2009

The Muni Wireless Phoenix

They’re baaaaack. The enemies of muni wireless (and all muni-driven network projects) are rearing their head with a vengeance in the recent couple of weeks. They’ve taken to the OpEd pages to attack local government involvement in anything coming from the broadband stimulus bill. And using a marginally accurate “report” as their hammer. You have to check out Glenn Fleishman’s dissection of this sham-as-research

Well, three things have happened recently to counteract the fear mongering sock puppets.

1. Cablevision has just revealed that free municipal wireless dramatically drives up cable service subscriptions.

2. WiFi network manufacturer Meraki is changing the economics of muni network deployment.

3. Successful municipal network projects are breeding more success.

Game Changers

Over a year ago I predicted that muni wireless would give cable companies a good way to expand and protect their wired service offerings – http://tinyurl.com/b5xydk (And no, you can’t borrow my crystal ball). Cablevision eventually took the plunge, and last week disclosed a 70% sequential growth in net subscriber additions, attributed primarily to its free wireless service.

Once this realization becomes absorbed in the cable operator world, along with the resulting fear of being left behind, it’s going to change the proposal-writing strategy of some of these providers when they see they have a play in mid-sized and even large cities. Smart local governments now have leverage to get small and regional cable companies to partner in projects to reach underserved communities.

Meraki has quietly over the last couple of years enabled dozens of towns and communities to build either limited-reach networks that cover neighborhoods where they want to improve economic development, or complete area-wide networks. The company recently released a new outdoor access point they claim gives good coverage for less than 1/3 the cost of competitors’ APs. 

There are thousands of small towns in America that, whether they have fiber throughout the town or just a few strands coming into key areas, will find it economical to consider a wireless network if it’s inexpensive enough. Couple that with network management features and services that make it possible for a non-techie to deploy and keep running, local governments have an option worth considering with or without broadband stimulus money.

Success breed success

The muni wireless success stories bubbling up point to the positive economic benefits these networks deliver, as I point out in my recent Fierce Broadband column, and strike fear into the hearts of incumbents. They’re worried that in some areas their days might be numbered. And they’re right. Hence the OpEd trench warfare.

These success stories are the key to effective pushback strategies when local governments go to apply for stimulus money. The Obama administration wants to create successes quickly with its stimulus bill, so where are NTIA and RUS likely to invest those grants? I’d say definitely into communities that show how they can emulate these wireless success stories.

March 5, 2009

Agenda for Tri-agency Broadband Stimulus Meeting in D.C.

Filed under: Broadband stimulus — Craig Settles @ 10:16 pm

The agenda’s available for the FCC/RUS/NTIA meeting next Tuesday (3/10). It looks to be a pretty innocuous affair. We lucky souls who get seats will see agency senior brass who most of us probably won’t get close to again in life. We could all be pleasantly surprised if they say anything during the first 40 minutes that’s noteworthy. But I’m guessing not.

The next 20 minutes could provide some insight to how steep a hill folks are going to have to climb to get to those grants. The final 30 minutes of Q & A? This is a pretty good analogy for the broadband stimulus bill conundrum. There are way more people (500+) needing answers than there are time and resources (staff) to meet the need. A lot of folks are going to leave that meeting not fully satisfied.

If you’ve been writing or following reports about how many public and private sector entities in states nationwide are lining up wish lists for broadband grants, you see the really big issue that trumps all others. There are way more organizations coming in with broadband needs than there are time, money and (maybe) agency staff to meet these needs.

So the really big question on March 10 is: in a year, will the logistics of administering this money have worked well enough so at least a reasonable number of communities are satisfied with the result? Yeah, there are a lot of pressing policy questions that determine who benefits from these grants and by how much. But none of this matters if the grant-administration process implodes under the weight of demand.   

Subverting Broadband Stimulus Bill in PA

Filed under: Broadband stimulus — Craig Settles @ 8:59 am
Tags: , , ,

[Updated, March 10]

This just popped up yesterday and it has very disturbing implications for Pennsylvanians who could benefit from some of the $7.2 billion in broadband stimulus money. It could also be the initial act in a telco national strategy to disrupt the stimulus bill’s impact in other states.

State legislators in Pennsylvania are trying to subvert the sovereignty of local governments with an incumbent-protection anti-taxpayer bill. They introduced Senate Bill 530 that will prevent local and county governments from being involved with broadband projects.

This bill pretty much spends most of its pages explaining in great detail who’s excluded and from doing what. One thing about House Bill 30 (the original PA bill that limited municipal involvement in network projects) is that local governments can ask Verizon for certain types of broadband networks, and the telco has an option to refuse to do it and let the city build it however it wants. Or Verizon has to agree, in which case they have 12 months to build that network according to spec. If they don’t do it in 12 months, the cities can build it.

This new SB 530 prohibition will be enforced regardless of whether local governments determine there is a need to partner with private entities to provide broadband to areas the large telecom and cable companies refuse to service. This bill allows incumbents to nullify the will of voters and local governments, as well as try to hog money that is supposed to help taxpayers, not further enrich companies that are the main cause of so many communities lacking broadband. The bottom line here is this proposed bill eliminates the questionably logical, but bearable HB30 option to give the incumbent right of first refusal.

This appears to be a total stealth move. People who follow broadband for a living didn’t know about this except for a fluke e-mail. Since PA has a history of legislators meeting late at night to pass bills a lot of the public might object to, I expect this is the case here. 

It’s time shine the light of day on this outrage, and rally constituents to put pressure on the PA state senate. The prime sponsor is Sen Patrick Browne, a Republican and chairman of the Senate Finance Committee.

Originally I thought this was a possible move by the incumbents to attack the effects of the stimulus bill. However, after receiving a note from Verizon, I believe I should present their side of things while maintaining my criticism of the bill itself. 

Craig:

I wanted to make a couple of points in response to your post on Pennsylvania Senate Bill 530. 

First, Verizon had nothing to do with the introduction of S.B. 530.  The bill sponsor, State Senator Pat Browne, has introduced this legislation for the past three sessions.  You should contact the senator for his views on the legislation.  I repeat: It is not a Verizon bill.

Second, on House Bill 30 from 2004: That legislation has been a success – with commitments to ubiquitous broadband deployment throughout Pennsylvania and a Bona Fide Retail Request program that, to date, has accelerated broadband service to 124 communities in some of the most rural parts of the state in addition to the many hundreds of communities whose residents and businesses already have broadband. 

Further, even with the municipal broadband provision of the legislation, which gave the incumbent provider the right of first refusal in providing broadband in a municipality and which actually was proposed not by Verizon but by another company, Verizon has never stood in the way of a municipality that sought to provide broadband services in Pennsylvania –nor will we.

Harry Mitchell
Verizon
Communications
Director-Media Relations, Mid-Atlantic/South-Central Regions

Update

Harold Feld’s post on The Wet Machine does some more analysis of SB580.

February 8, 2009

Is Our Vision Too Narrow?

Filed under: Industry commentary — Craig Settles @ 6:57 pm

The national broadband discussion, both in Congress and elsewhere, has to stop making it seem as if our only options for solution providers are Verizon and incumbent cable companies. As in, “open access will limit incumbents’ involvement,” or “requiring 50 Mbps will prevent the cable companies from participating.” Yeah, that’s true, but it’s only one side of the story. Let’s not present it as if they’re the only game in town. They’re not!

There are regional and local telcos such as MTCO in Metamora, IL that can step up to the plate (read about them in my report). Have we forgotten that it is the small and the swift that bring technology up to the next level? In the closing days of this stimulus battle, if Congress stands firm for tougher requirements, local or new players will step into the breach.

Some politicians live and die in the name of tax credits, but when you talk to some of the smaller players, doesn’t it seem as if easier access to bank credit will do much more for them to get network projects going than tax credits? This is the feedback I’m hearing. Besides these regional players, there are local government-managed options.

Though people don’t want to bring up the ghosts of municipal wireless projects failed, if you look at the broadband solutions developed in rural places such as Greene County and Bristol, VA, you see many viable solutions run by municipalities or public utilities. They’re providing services and operating in the black.

Let stimulus money flow to local governments, and pass national legislation that removes the handcuffs of telco-influenced restrictions on their ability to provide their own solutions. Pulaski, TN officials talk about how their public utility cannot provide the community that’s down the road with service that could save this town millions of dollars, thanks to telco-induced anti-competition legislation. At the same time, the telcos whine about how difficult it is to get fiber into remote areas because of the vast expanse of our national geography while side-lining those with proven ability to do just that.

If Congress looks at what’s working, and listens to the people in the trenches making it happen, we would hope they craft a final version of the broadband stimulus bill that opens the universe of options for local communities in a real and meaningful way. Otherwise, it’s just more dollars for the same old failures. 

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