San Francisco eyes municipal telecom infrastructure project to bring fiber to every doorstep

San Francisco Municipal Broadband Targets $26 Monthly Base Price - Telecompetitor: City officials have recommended construction of a San Francisco municipal broadband network based on a public-private partnership. The recommendations came in a 103-page report issued by the office of Supervisor Mark Farrell on March 15.
According to the San Francisco Municipal Fiber Advisory Panel’s report – Financial Analysis of Options for a Municipal Fiber Optic Network for Citywide Internet Access – a publicly funded broadband utility network would cost the city an estimated $867.3 million in construction costs plus $231.7 million a year in maintenance costs. Projected subscriber revenue would result in an annual deficit of $145 million. Given this, as well as the desire to build in some market competition, the authors recommended the city launch a public-private partnership model that calls for all San Francisco homes and businesses to pay an average $26 per month utility fee for baseline Internet access. Introducing tiered pricing models based on type of service or bandwidth use could offset operating costs and lower baseline fees.

The Utah Telecommunication Open Infrastructure Agency (UTOPIA) had planned to expand its services using a similar financing mechanism with a private finance partner, Macquarie Capital Group. It pulled the plug on the partnership last month amid resistance to the utility fee. However, the model could fare better in the city by the bay due to multiple factors including its relative affluence, more liberal political leanings and its well established place in the information technology industry. Unlike UTOPIA, a regional network involving several municipalities, San Francisco is also a much more compact service area of just 14 square miles with pre-existing municipal infrastructure that would facilitate construction. That likely made it easier for San Francisco to reject the model used by legacy telephone and cable companies and Google Fiber that builds infrastructure serving some but not all neighborhoods.

Why the “more competition” argument for better Internet service is misguided

Hardly a day goes by without calls for “more competition” as the elixir to make modern Internet-based telecommunications services more widely available and offering better value than those offered by the legacy incumbent telephone and cable companies. U.S. Federal Communications Commission Chairman Tom Wheeler has curiously joined the chorus calling for more competition -- even though his agency and its 2015 Open Internet rules are predicated on regulating Internet service as a natural monopoly common carrier utility.

The problem is telecom infrastructure by nature isn’t a competitive market defined as having many sellers and buyers. There are many buyers but there cannot be many sellers because it’s too costly and economically inefficient to have multiple providers building and owning infrastructure connecting homes and businesses. More competition isn’t a solution here. 

In the states, the legacy incumbents reinforce the notion of competition by blocking projects that would threaten their service territory monopolies. From their perspective, these projects represent competition because they would potentially steal away customers. Therefore, proponents reason, competition must be a good thing if the incumbents oppose it. This however illustrates the faulty reasoning of the “more competition” argument. 

The problem is the pro-competition proponents are buying into the incumbents’ concept of competition -- and not a consumer perspective. For the incumbents, any project that would build infrastructure in their service territories is competition. However, for consumers, having a choice among many sellers is competition. That’s not possible with telecommunications infrastructure. But it is possible if the infrastructure is publicly owned like roads and highways. That would open up Internet service to competition since multiple Internet service providers could offer their services over that infrastructure.

Time to punch the reset button on U.S. telecom infrastructure

AT&T, Comcast Kill Local Gigabit Expansion Plans in Tennessee | DSLReports, ISP Information: For some time now municipal broadband operator EPB Broadband (see our user reviews) has been saying that a state law written by AT&T and Comcast lobbyists have prevented the organization from expanding its gigabit broadband offerings (and ten gigabit broadband offerings) throughout Tennessee. These state laws currently exist in more than twenty states, and prohibit towns from deploying their own broadband -- or often even striking public/private partnerships -- even in cases of obvious market failure. A proposal that would have recently lifted this statewide restriction in Tennessee was recently shot down thanks to AT&T and Comcast lobbying. Even a new compromise proposal (which would have simply let EPB expand slightly in the same county where it is headquartered as well as one adjoining county) was shot down, after 27 broadband industry lobbyists -- most of whom belonging to AT&T and Comcast -- fought in unison to kill the proposal.

It's understandable the legacy telephone and cable companies want to keep out interlopers who might threaten their de facto monopolies for Internet service. The incumbent protectionism on display in Tennessee plays out in multiple states in the form of laws barring public sector involvement in telecom infrastructure projects or as this month in California and Kentucky, efforts to block fiber to the premise (FTTP) projects from gaining access to utility poles. This obstructionism isn't going to go away and requires a major reset in order for it to come to an end.

As I wrote in my recently issued eBook Service Unavailable: America's Telecommunications Infrastructure Crisis, the nation is already two decades behind where it should be relative to replacing its legacy metal wire telecom infrastructure with FTTP. The book proposes the federal government construct universal FTTP as public works. As roads and highway were to the 20th century, it's vital infrastructure for the 20th that's too important to be left in control of the legacy incumbents. It's time to punch the reset button so the United States can move forward to the future.

Vermont regional telecom district accesses institutional bond funding for expansion

ECFiber's growth plans could double service area | Vermont Business Magazine: ECFiber, based in Royalton and now officially known as the East Central Vermont Telecommunications District, announced plans to activate 110 miles of network in 2016 and build an additional 250 miles in 2017. “Working with bond underwriters, we believe ECFiber has reached the point in its financial development that allows us to access institutional capital markets for the first time in 2016,” says Irv Thomae, District Chairman. “Since 2011, we have relied on 450 local investors, some state-provided dark fiber, and VTA and Connectivity Fund grants to build the first 340 miles of network. By the end of 2016 we will be in parts of 21 of our 24 member towns, but many neighborhoods that desperately need ECFiber service cannot afford to raise the $30,000 per mile to complete a build. Outside financing would finally allow us to build to those towns that need us the most, not just those where we can raise capital.”

Regional telecom fiber modernization projects such as the Utah Telecommunication Open Infrastructure Agency and WiredWest in western Massachusetts have hit obstacles obtaining sufficient capitalization to expand. Due to the high cost of infrastructure projects, access to capital finance markets is critical given limited funding available from local governments and property owners.

According to this story by Vermont Business Magazine, the East Central Vermont Telecommunications District is accessing the institutional bond market for the first time for needed expansion capital, a development that bears watching since it demonstrates the bond markets' receptiveness to working with projects sponsored by utility districts.

Google fights AT&T, Comcast over Bay Area Google Fiber service - San Jose Mercury News

Google fights AT&T, Comcast over Bay Area Google Fiber service - San Jose Mercury News: MOUNTAIN VIEW -- Google's plan to bring ultrahigh-speed Internet service to the Bay Area has run into a decidedly nontech hurdle: utility poles. To roll out Google Fiber in five Silicon Valley cities, the tech giant needs access to the poles for stringing up fiber cable. But in several cities a who's who of Google competitors are standing in the way. The outcome of the pole fight is likely to have a profound effect on which communities get Google Fiber and which don't. "The infrastructure needs to be mostly above ground," said MoffettNathanson Research analyst Craig Moffett. "You can't proceed ... if you don't have pole access." Similar battles have played out in other cities across the nation, slowing Google's multibillion-dollar program while competitors push forward with their own gigabit-speed offerings.

This illustrates the death by thousand cuts delaying strategy of the legacy incumbent telephone and cable companies to protect their service territory monopolies from interlopers offering telecommunications infrastructure far superior to their own. Those legacy dinosaurs have armies of attorneys prepped to spend years if not decades in the courts erecting legal speed bumps to slow the progress of new entrants like Google Fiber.

Some observers believe the U.S. Federal Communications Commission's promulgation of its Open Internet rules in 2015 deeming Internet service providers common carrier utilities would make pole access easier. But so did others when Congress amended the Communications Act in 1996 to allow competitive local exchange carriers (CLECs) the right to use incumbent telephone central offices and cable plant to offer competing telephone and DSL services that was just emerging in the late 1990s. The incumbent telcos took a decidedly uncooperative and litigious stance to hamstring those providers as well.

These incumbent delaying tactics deepen America's telecommunications infrastructure crisis because they push a nation that's already a generation behind where it should be in terms of replacing its legacy metal cable system with fiber to the premise (FTTP) even more behind the curve. The situation calls for aggressive federal intervention in the form of a crash program to modernize and build out this vital telecom infrastructure to serve the nation's needs in the 21st century.

Obama administration, FCC use incumbent "broadband adoption" talking point designed to shift attention from nation's telecom infrastructure deficiencies

Obama Seeks Broadband for 20 Million More Low-Income Subscribers - The New York Times: The White House also released a report outlining the economic effects of broadband adoption, focused on how families without broadband at home are at a disadvantage in finding jobs.

Once again, the Obama administration and the U.S. Federal Communications Commission conflate access to advanced telecommunications service with its use. They are two different things. The unfortunate use of the term "broadband adoption" parrots a favorite talking point of the legacy telephone and cable companies to take the focus off the nation's telecommunications infrastructure deficiencies that leave some 34 million Americans without access to landline premise service according to the FCC's most recent estimate released in January. After all, the incumbent argument goes, why should we build Internet telecom infrastructure when people aren't using computers at home and therefore not adopting "broadband?"

The term "broadband" dates back to the late 1990s when people were beginning to migrate from narrowband, dial up Internet service to faster "broadband" connections. The context there was personal computer connections to the Internet. Which is also outdated given that today, Internet connections also provide voice and video services that don't require a personal computer.

As long as policymakers insist upon living in 1999, it will be difficult for America to advance into the 21st century.