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Your ISP's Worst Nightmare ... Municipal Broadband Networks [telecom]

By Bob Rankin, The Rankin File, November 9, 2015.

The worst nightmare of Verizon, Comcast, and other commercial broadband providers is coming true. Across the USA, their customers are voting to establish municipally owned and operated networks. The tide is turning overwhelmingly in favor of public alternatives to private broadband. Here's what you need to know, if you'd like low-cost, super-fast Internet in YOUR town...Municipal Broadband Networks.

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Municipalities that operate their own electric power utilities are in a good position to offer broadband service at lower retail prices than commercial companies in part because they face lower capital and operating costs. They don't have to negotiate for, and pay rental for, pole attachment rights and access to ducts and manholes. They don't have to negotiate a franchise agreement and pay franchise fees. They can fund construction projects through low-interest revenue bonds or general obligation bonds.

Depending on the municipality they may not have to maintain a separate office or cover the expense of such things as customer service, billing, accounting, insurance, legal services, rent and lease expense, utilities, vehicle expense, amortization, depreciation, interest and taxes. And of course, as non-profit municipal corporations, they don't have to pay dividends to stockholders.

So yes, in favorable circumstances, municipalities can indeed offer broadband services at lower retail prices than commercial companies. Chattanooga is a well-known example; other examples include Wyandotte, Michigan and Windom, Minnesota. Each of these cities owns its own electric power utility.

But even owning an electric utility doesn't always guarantee success. Provo's iProvo network has not been financially successful. In 2013 it announced that Google would acquire the network for $1.00.

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Neal McLain

Reply to
Neal McLain
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I'm hooked up to a local cable company where I live now, and the service has been good. I do, however, use an electrical cooperative for power.

There are good and not-so-good aspects to either commercial or cooperative suppliers: the way Comcast packed FCC hearings with homeless people, and its brazen port-blocking is a great example of the not-so-good part, but my power has been out four times since I've moved here, once for the entire town.

For those considering a cooperative local phone company, it's all about the details: just having rights to "most of" the poles doesn't mean that they are all able to carry the loads of cables, or the stress of new construction - or that licensors whom were savvy enough to negotiate "single use" contracts will meekly hand over permission to add new services - and that's just the start.

On the one hand, there is new and more reliable technology, such as digital switches, which make running a "phone company" a lot easier than the electromechanical offices of my youth. On the other, there are byzantine rules, exotic billing procedures, and a myriad of special cases to deal with, even for small communities.

I'm not saying "better the frying pan I know than the fire I don't" - it's always best to have alternatives. However, it's also wise to consider /all/ the benefits and /all/ the risks before changing what has become a fundamental part of life for most people.

Reply to
Bill Horne

If this starts to become really popular, I predict that the big broadband companies will get into the business of operating these networks. And cities will welcome outsourcing this -- why try to operate a complex network when there are companies with decades of experience doing it?

It's similar to hotel WiFi/broadband. When it first started, the hotels were doing it on their own, but eventually a handful of companies sprang up that specialize in it, and most hotels use them.

Reply to
Barry Margolin

Well, maybe. In my experience municipal power utilities already have decades of experience maintaining power networks, and some of them even operate their own CATV networks. Coax and fiber networks certainly require installation methods different from electric power wiring but it's nothing that an experienced power crew can't learn. The three cities I cited in my previous post (Chattanooga, Wyandotte, Windom) operate their own power utilities, and in each case the same utility also runs the broadband network.

Your suggestion that some municipalities might contract a broadband network to an experienced network operator is more likely in the case of municipalities that do not own their own power utilities. And you can probably guess which companies will submit the lowest bids: the incumbent CATV and telco. These companies already have the rights-of-way in place, and they have the local knowledge and experience to do the job. Nothing would motivate the Comcasts and the Verizons to build fiber-based broadband networks like having somebody else pay for it.

Of course Google will be watching. It might submit its own bid or it might partner with the incumbent CATV. Such a partnership would be a powerful competitor: the local knowledge and rights-of-way of the incumbent CATV combined with Google's data network and storage capabilities and its financial resources.

Neal McLain

Reply to
Neal McLain

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