The Future of Broadband Is Here Today – And You’re Going to Miss It

33 Comments

While the various federal agencies and Congress discuss, pontificate and wage war over the future of broadband, here’s a little secret. That vision they have of getting 100 Mbps service to 100 million homes by 2020? Several U.S. markets have already gone way beyond it to deliver the future of broadband today.

In many respects, Washington insiders determined to get the U.S to a better place when it comes to broadband are held back by large telcos, forced to fight last century’s telecom wars. But while Washington debates, many markets miss out. Those who want better broadband should take their lessons from some of the cities who have successfully deployed their own networks.

Chattanooga, Tenn. is rolling out a citywide network that delivers 150 Mbps to customers. Today. Not five or ten years down the road. “Our employees designed the network,” said Lacie Newton, spokesperson Katie Espeseth, VP of fiber optics for EPB, Chattanooga’s public utility. “Along with contracted employees from private companies they are building and operating the network. No doubt there are others capable of providing advanced communication services. But unless we did it ourselves, we didn’t believe that others would bring these type services to every home and business in our community.”

In North Carolina, Time Warner Cable declares war on municipal broadband networks every year in the state legislature. One such fight ended just last week, and the municipalities won. The rest of the state may want to take that victory and model itself after Wilson, N.C. The city of Wilson’s small IT Department built a fiber network that delivers residential service that’s 10 times faster than Time Warner Cable’s top service tier of 10 Mbps. Wilson’s own 10 Mbps service comes at a lower price than Time Warner’s. Aside from being 18 months ahead of its return on investment projections, which reflects competent business management, Wilson’s network offers technically impressive services. For example, it can provide businesses a gigabit connection. Instead of fighting the city, Time Warner should send their engineers and marketers to Wilson to figure this stuff out.

Santa Monica, Calif.’s IT crew started their fiber network with no money in the budget, just the $750,000 they eliminated from the city’s operations budget by replacing expensive older communications technology. With this initial “investment” they upgraded the city’s fiber network, and then sold local businesses broadband services that Verizon (s vz) wouldn’t offer. Within four years the IT group built up a $2.5 million capital fund. They recently announced a 10 gigabit service.

These local governments, businesses, institutions and regular citizens rallied together and said “if broadband is to be, it is up to me.” They’re not alone. Close to 60 communities run their own fiber networks, some more than a decade old, in many cases, offering faster speeds than incumbent telcos in their markets.

A new take on free market forces

While the FCC explores a third way on a path made needlessly longer by national corporate interests, local markets are delivering broadband’s future faster with a fourth way. Congress and the FCC could do the U.S. a world of good by keying in on this possibly better way, and by changing how we think about the task of bringing true broadband to communities that need and want it. Champions of free market forces may want to consider the merits of this approach to broadband that Communities United for Broadband finds effective in calling small-town and urban America to action. The principles of the approach are as follows:

  1. Our community is a free market.
  2. As a market, our businesses, local government, institutions and individuals collectively spend significant dollars on communication services.
  3. Despite our spending as a market, we have un-met broadband needs and unfulfilled dreams.
  4. Subsequently, we will use our purchasing power and political clout to get the broadband we need and want through private- and/or public-sector solutions.
  5. Key to the success of our free market strategy is our ability to encourage, facilitate or create competitors in our market, which we will do.

This free market approach to broadband, rather than a “what’s good for big teleco is good for broadband” philosophy, encourages bringing representatives from communities into a full partnership with private sector organizations to shape policy. More importantly, this approach should lead D.C. and state decision makers to create rules, procedures, grants, legislation, etc. that enable communities to implement their own best solutions. For example, reform Universal Service Fund (USF) procedures so local communities have a strong voice in deciding which broadband plans receive USF awards.

Local markets (towns, cities, counties, even states) that own the problems of inadequate or unavailable infrastructure broadband need to be driving a lot of this decision-making. They own the issue. They reap the rewards, or suffer the unfulfilled promises, of broadband resulting from Congress’ and the Federal agencies’ decisions.

In January last year, I wrote a report on broadband that said:

“We need Congressional legislation that removes barriers to local communities’ ability to make decisions and implement solutions they feel are in their respective best interests. Otherwise, the progress of broadband-influenced economic development will be seriously disrupted.”

Looking at the spasms incumbents are having just because the FCC wants to hold a discussion on broadband reclassification, it’s not just economic development we need to worry about. We need to turn more of the broadband discussion over to local markets because they seem to be the only ones able to deliver the future. Just ask Chattanooga, Wilson, and Santa Monica.

Craig Settles is a broadband industry analyst and Co-Director of Communities United for Broadband and was recently named one of Huffington Post’s 16 Tech Titans on Twitter (@cjsettles).

33 Comments

Gregg Smith

There are plenty of muni fiber disasters too. Burlington VT and Memphis TN come to mind off the top of my head. It takes a different mindset than most utilities or municipal governments have to run a muni network that’s not a drain to taxpayers and can pay back the debt it incurs installing the network.

Based on a review of the Chattanooga muni network, triple play costing $150 is no lower than what I’m paying Comcast for similar service. I don’t understand the value?

Richard Bennett

The purpose of many of these projects is simply to make a statement; it often turns out to be a very expensive statement.

Richard Bennett

Municipal broadband networks have a well-know life cycle:

  1. In the beginning, the project generates high hopes and high enthusiasm for “sticking it to the man.” Extravagant claims about speed and price are made, geeks salivate.

  2. Deployment is a disappointment as we find that the number of paying customers motivated to pay the freight for a service that vastly exceeds their requirements in some respects and falls short in other respects (triple play and reliability, mainly) is much less than anticipated.

  3. The project drowns in red ink and is either shut down or sold to a private operator. The politicians who championed it leave office and the taxpayers are enraged by the ongoing cost of bond service.

  4. Muni networking advocates move on to a new town with the same old story.

See Broadway musical “The Music Man;” rural communities have been dealing with charlatans for a long time.

Craig

A well-researched analysis of the 60+ communities that have fiber networks, the counties that have middle mile infrastructure and the many communities that developed wireless networks for government and other uses prove there are plenty of wins to justify pursuing these networks.

I’m often amused that many of the failed networks opponents love to trot out (Philly, Tempe, AZ, Portland, OR) were actually run by private companies – not local governments. Yes, there are and will likely be some government failures, just as there are public works projects in some towns that fail and the occasional bridge to nowhere. But there are many more wins than loses, so we continue to invest in public works. So it is (should be) with broadband.

Richard Bennett

I’m not familiar with a single muni network that I would call a long-term success that’s operated by government. There are some notable successes where government has confined its role to installing fiber and selling wholesale access to small and large ISPs, but they tend to be in Europe. The American muni projects that draw the most attention are either on the drawing board or in the very early stages of deployment. Service in Burlington, VT costs more to the user than Verizon, for example.

If you have specific examples of successful government-operated broadband networks, please share.

Craig

Here are 10 networks to start – http://bit.ly/9Yd9op, some over 10 years old. They use different business models, some are wireless while others are wired.

Community broadband doesn’t mean every local government owns the network 100% (many are public/private partnerships of one form or another) or sells services directly to the public. It means the communities and their leaders defined the needs, then drove the process of identifying and implementing the solutions, and they retain some level of control once the network is executed. And most times the community has skin in the game.

Richard Bennett

Interesting list. The median subscriber count is 1863. I see there are two serious networks, one in Tacoma and other in Iowa, built before there was much of a broadband buildout in those areas. They’re probably worth some examination.

Richard Bennett

So your Tacoma network is an HFC DOCSIS entwork with max download speed of 8 – 15 Mb/s, and your Iowa network is an HFC DOCSIS with max download speed of 8 Mb/s. Contrary to the claims of super-extravagant speeds in your article, these are sub-standard performance levels for DOCSIS; Qwest and Comcast offer faster service in Tacoma, so what’s the hook that would make anyone want this service today?

I can understand the people in ultra-tiny rural communities who want to band together for some broadband, the argument for deploying larger networks hasn’t been made.

WhatNow

There is one flaw in the municipal broadband it can leave anyone outside the boundary out in the cold just like the telcos have left many of them in the smaller towns. The big cities are boosting speed but the small towns have slow speeds and outside those towns may get dialup. I have no problem if they can come up with the commitment to serve the rural customers in a reasonable amount of time and cost just like phone and power. I have heard some of the communities in one of the New England states Verizon dropped is planning to serve everybody in the area that has a phone or power. I just don’t like to see the families that were left out of the first broadband left out again. I would suggest working from the areas at the end and working in so when they run out of money they will have service and there will be enough people in the middle to demand they get fiber service.

B Ebb

At macro level, the symbiatic relationship between Telco and ASP’s like GOOG have created situation where the status quo creates enormous rents to the consumers….one by one, local communities will solve the problems the monopoly/duopoly fail to do….nice article…

Karen Jenkins

Well said. People in the small Appalachian communities in Lee and Wise counties in Southwest Virginia are blessed to have Sunset Digital Communications… a small broadband provider and innovator doing what others can’t… provide fiber to the home at 100 Mpbs. The broadband is enabling several “cottage industries” of folks working at home in an otherwise economically depressed area.

Malik Graves-Pryor

What’s always struck me is that we as a nation are so willing to spend whatever it takes for years and years and years to fund wars, but ask for the billions to wire this country with next-generation fiber, or the billions to upgrade our failing, patchwork, energy grid, or the billions to repair our roads, bridges, and tunnels, or the billions to invest in a comprehensive high speed rail network, and all of a sudden everyone’s a debt and deficit hawk.

It’s unfortunate that our priorities tend to be so backward. While countries in Europe and Asia are constructing truly next generation networks, we’re stuck petering along at speeds, on average, not much better than what’s needed to stream youtube videos.

Jobs would be created if we invested the sums we’ve spent already on Afghanistan and Iraq, for example, and we’d be positioned to compete on a global scale for years to come.

Business models would become more fine-tuned and efficient with higher speed access. Some ideas that have been tossed around?

1) Where is my blu-ray quality real-time streaming netflix service? (30-50mbit/sec+)

2) Where is my videogame real-time access service? (no more disks. take Steam, Wii Virtual Console, PlayStation Store, XBox Live, and put every multi-gigabyte game up as an always accessible download)

3) Where is my CD-quality (1.5mbit/sec+) music service where I own all of the music I purchase and can stream it from anywhere and from any device, wired and mobile networks, in perpetuity?

4) Where is Skype/Fring/FaceTime as a mass adopted, usable mobile product?

Until the day comes when we decide to invest the appropriate sums in our own country and free ourselves from the mantra that everything has to be done by private business, we’ll be stuck in the current paradigm of timidity and go-it-slow, so-called, progress.

And during that time, we’ll be outcompeted and outinnovated by other nations, eventually being left behind. I just hope it changes soon, but I’m not holding my breath.

Brett Glass

As usual, Craig Settles spouts misinformation in an attempt to promote his anti-business agenda. Above, he engages in the old, misleading tactic of claiming that the maximum, theoretical capacity of the hardware is the same as the amount of data it can actually economically deliver. The truth is that no network provider can stay solvent if it offers 150 megabits per second of continuous Internet backbone bandwidth at a price of 50 or even 150 dollars per month; it would be selling the bandwidth below cost.

Don’t fall for Craig’s deceptive sales pitch. The fact is that municipal networks are rarely even sustainable, much less cost-effective. The private sector knows how to run networks that work and are self-sustaining. The public sector doesn’t have a clue.

Swammi Undersnoot

Indeed, because we all know how nimble the current incumbents are at providing inexpensive and compelling services to all people in the US… oh that’s right.

We wouldn’t need municipal broadband if the private players filled the needs of the market.

Conquistador

@Brett – we know you run an ISP, and you appear to be against non-telcos (Google, Government) because they have the potential to eliminate smaller competitors (your words).

What is a fair price (for user and provider) for say, a 20Mbps connection, who should provide it, and what medium (cable, fiber, 4G) should it be? I’m genuinely curious.

Conquistador

If you say so, Brett – but you did decline to enlighten us about the supply and demand curve for bandwidth pricing.

Conquistador

Brett Glass – 2/11/2010, this blog:

“…But Google’s aim is to be anticompetitive. What Google wants to see is broadband as a monopoly municipal utility, run at a loss that is made up via taxpayer dollars, with all commercial ISPs dead and gone….There would be no choice of carriers, because the taxpayer-subsidized one would drive the ones that had to earn their keep out of business.”

Jared Hardy

My reading of the Brett Glass quote, utilizing the network as data road system concept for clarity (my changes are in []):

“…But Google’s aim is to be [socialist]. What Google wants to see is broadband as a [government road system], run at a loss that is made up via taxpayer dollars, with all [toll road profiteers] dead and gone….There would be no choice of [roads taken], because the taxpayer-subsidized [roads] would drive the ones that had to [profit from tolls on monopoly routes] out of business.”

Roger Weeks

@Conquistador: Therein lies the irony. Telcos will fight these municipal fiber deployments in court and legislature, but when the time comes, they will happily sell backhaul to anyone who pays for it. Cable companies less so, but they don’t make money from backhaul the way telcos do.

Autopfleger

In my state of Pennsylvania a municipal government is required by state law to get the permission of the incumbent telco in order to operate a public broadband network

ISP Operator

Too late for Nebraska, Missouri, Arkansas, Texas, Pennsylvania, Virginia, and Nevada that already have state laws banning municipally-operated public broadband networks. And another 11 states have various legal barriers to make municipally-operated public broadband difficult. In my state of Pennsylvania a municipal government is required by state law to get the permission of the incumbent telco (Verizon for example) in order to operate a public broadband network. These laws were all created at the request of telco lobbyists over the past 10 years or so.

Ajay Mohan

Singapore is in the process of implementing it. I am hoping to get it by this December.

Wells Baum

I think the digital divide persists, not because I’m a naysayer but because it’s the municipality that should be responsible for setting up high-speed Internet. The federal government will take years if not a decade to set up first-world Internet everywhere. I would outsource the task to Google and be done with it.

Conquistador

I applaud any effort that bypasses the cable/telecom duopoly – but don’t these last mile fiber deployments still need connectivity from telcos somewhere?

Craig

Yes, you’re right. At some point you have to deal with the telcos. This is where creativity and hard-ass negotiating comes in. They may give you a high price and the community has to have leaders ready to beat ’em back down with a 2 x 4. One community (I forget which) leader told me they played two incumbents against each other and set up two entry points to the Net.

Counties and multi-city regional project leaders are building the fiber infrastructure and letting service providers buy access. They grumble, but they know they’re getting fiber backhaul without paying a lot for it, and have the sense to see there’s more business opportunity available than if they sit on the sidelines and whine.

Ralph Haygood

I live in Durham, NC. Time Warner Cable is why I’ve never bothered replacing my ancient 802.11b wireless router. Even plugging in directly (i.e., Ethernet, not Wi-Fi), I’ve never seen anywhere near 10 Mbps over my Time Warner connection; 3 or 4 is typical. And that’s one reason why I don’t tend to work at home.

The chutzpah of Time Warner trying to get the legislature to ban municipal broadband is impressive, and the venality or cowardice of the legislators abetting them is nauseating.

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