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Correcting Community Fiber Fallacies: Attacks on LUS Fiber

In just the last year the Lafayette Utility System (LUS) gigabit network has attracted 1300 high-tech jobsChairman Wheeler praises the network for doing what many communities hope to do, but cannot because of state laws limiting municipal broadband networks. Critics are desperate to discredit the network, using false statements and misinformation.

The Reason Foundation released a paper by Steven Titch in November, 2013, to discredit LUS Fiber. Here we offer a point-by-point rebuttal of the report. Titch makes numerous claims that he does not support with any evidence. Much of the evidence he uses in support of other claims is out of context or erroneous. And even then, his worst criticism is that the network may struggle in the future but is not currently failing.

Our critical response to Reason Foundation's report (called Lessons in Municipal Broadband from Lafayette, Louisiana) should be helpful to any community considering its own municipal network investment. This document is the first in a series of critical works that we are calling the "Correcting Community Fiber Fallacies" series.

The official page for Correcting Community Fiber Fallacies: LUS Fiber is here, but you can get the pdf directly if you prefer.

Don't forget that you can sign up for our weekly newsletter here - so you won't miss these important stories.

Community Broadband Networks is committed to helping policy makers understand the reality and challenges of community fiber. Correcting Community Fiber Fallacies (CCFF) is designed to correct myths surrounding municipal fiber, and provide the information needed to counter erroneous claims.

Steven Titch's original report can be found at reason.org.

FreeUTOPIA Destroying Myths About Macquerie in Utah

Jesse Harris at FreeUTOPIA recently published a piece correcting the many fantastic errors disseminated by the Utah Taxpayers Association. The group continues to spread lies to poison a proposal from Australian company Macquarie that could reinvigorate the ailing network. We spoke with Harris and Pete Ashdown, from Xmission, about the proposal in episode #85 of the Community Broadband Bits podcast.

As can be expected, the arguments are nothing new, but the Utah Taxpayers Association still finds a way to take it to new extremes. Harris' post is worth the read because it offers truths to correct misinformation.

After correcting several points, Harris writes:

Really, their diatribe just goes on and on like that. A lot of it is basic fact-checking stuff that’s flat-out wrong, but they know those kinds of statements will rile people up and get them too angry to consider the real facts.

The best thing you can do right now is to make sure you show up at city council meetings, let your elected officials know you support the deal, and make sure you counter any of the flat-out false talking points the opposition will be trotting out time and time again. We’re really close to having this thing in the bag, and we can’t let up until the ink dries on the final agreement.

In a late-breaking story, he also says he has evidence that CenturyLink is behind this astroturf campaign. Not at surprising, but we should not sit idly by while powerful corporations try to undermine our republic.

A Look at Mediacom Propaganda in Emmetsburg, Iowa

Earlier this month, a majority of voters in Emmetsburg supported a proposal to issue bonds to build a fiber network. Nevertheless, the measure failed because Iowa requires a 60% majority when general obligation bonds fund all or part of a proposed project.

Years ago, the community voted to establish a municipal cable communications or television system. Emmetsburg leaders feel the time is right to realize the community vision. The proposed project would have used revenue bonds in addition to general obligation bonds.

We reported on Mediacoms' efforts to derail the vote with misleading lit drops across the community and we recently received new details on Mediacom's propaganda. The literature does not contain a "Vote No" statement, which may have allowed Medicom to avoid reporting it as an election expense.

Both pieces read like a talking point primer for industry executives. The letter from Senior Vice President Dan Templin, suggests that Mediacom is already operating gigabit service over fiber in Emmetsburg and that they intend to expand that service to business clients. The letter does not suggest that their gigabit service is affordable or reliable, neither of which are terms commonly used to describe Mediacom's services.

Mediacom was ranked last in a 2012 Consumer Report survey of 50,000 people. He, or rather his legal and marketing team, suggests the people of Emmetsburg and Mediacom "work together to leverage our [Mediacom's] investment." The people of Emmetsburg can begin working with Mediacom to "leverage" that investment by sending an email to a vague "info" email address. 

Mediacom also wrote a letter from Delbert Witzke, a Mediacom employee and local resident. It contains the classic anti-muni talking points used by these big companies headquartered far from the communities where they want to preserve their monopoly. The letter aims to inflame fears of local taxes increasing and misleads readers by implying by citing an irrelevant FCC statistic (which itself is also quite flawed).

In our experience talking with people about their cable companies, few people are so consistently critical and vehement as those stuck with Mediacom. However, enough people were swayed by Mediacom's campaign against competition in Emmetsburg to at least slow the prospect of a new network there.

Responding to "Crazy Talk" Volume 4 - Community Broadband Bits Episode #72

We are back with the fourth volume of our responding to "Crazy Talk" theme on the Community Broadband Bits podcast. The source of this week's crazy talk is a public relations executive for Time Warner Cable, following an interview I did on WUNC in North Carolina.

Lisa Gonzalez, myself, and our colleague John Farrell react to some of the claims made to discuss what you should know about community owned networks and broadband policy more generally.

We talk about misleading statistics, lies about how local governments fund networks, and whether Time Warner Cable or local utilities pay more in taxes.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

This show is 23 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Thanks to Mudhoney for the music, licensed using Creative Commons.

As Emmetsburg Plans to Vote on Muni Network, Mediacom Misinforms

The Iowa community of 4,000 will take up Public Measure D on November 5th. Voters will decided whether to approve a $3.5 million bond issue to cover approximately half the cost to build a FTTH system. Incumbent Mediacom is distributing flyers throughout the community urging a "no" vote. Community leaders are doing their best to combat Mediacom's propaganda by educating the voters.

We reported about the community's 1998 vote to establish a municipal cable communications or television system. The city did not act on the vote at the time because the project was cost prohibitive. The estimated cost of the project is now about $3 million less than it was in the late 1990s. Emmetsburg wants to seize the opportunity by joining The Community Agency (TCA), a coalition of municipalities in the region that collectively own a hybrid fiber coaxial cable network. Emmetsburg would join with a full fiber network.

The town currently provides natural gas, water and wastewater services through its municipal utility.

In a flyer [pdf] aimed at convincing locals to vote no, Mediacom brags that "Customers in Emmetsburg get the same services as those in larger cities..." Unfortunately, Mediacom's service in larger cities is also awful and more suited to the late 1990's than the modern digital economy. Consumer Reports has rated Mediacom among the absolute worst Internet providers in the United States.

Public Question D reads:

"Shall the City of Emmetsburg, Iowa issue its notes in an amount not to exceed $3,500,000 for the purpose of paying costs of constructing and equipping all or part of the Emmetsburg Municipal Communications Utility, including the acquisition, construction and installation of a fiber to the premise broadband communications system and related equipment and distribution facilities, and including all or a portion of the costs associated with connecting the Emmetsburg Municipal Communications Utility fiber system with the system of the Community Cable Television Agency of O'Brien County a cooperative undertaking among the cities of Hartley, Paullina, Primghar and Sanborn pursuant to the provisions of Chapter 28E, Code of Iowa?" 

In addition to $3.5 million in General Obligation bonds, the Emmetsburg Municipal Utilities would issue $2.63 million in Revenue bonds.

Emmetsburg Utilities

A recent Reporter/Democrat article covered an October 29th information session in Emmetsburg. Representatives from the Emmetsburg Municipal Utility Board of Trustees hosted the meeting to educate voters. A panel of technical experts and community leaders answered residents' questions. 

Curtis Dean [Broadband Services Coordinator from the Iowa Municipal Utilities Association] cited "a real world example: "I was in Spencer for the first decade of the Century, 2000 to 2010. People in Spencer saved over $10 million total on what they paid for their telecommunication vs comparable cities served by the same providers nearby. By the way, when we calculated those numbers in Spencer, we were using Emmetsburg as the comparison." 

If the referendum does not pass, the project will not move forward. If the community approves the measure, public officials estimate construction as early as next spring.

Community leaders urge voters to vote yes. The Mayor and five City Council members published an "Open Letter To Citizens Of The Emmetsburg Community" encouraging a positive vote:

We encourage each and every eligible voter in Emmetsburg to take the time to cast your respective vote on November 5th. This is a very important decision and is one that we should make as a community. Together, we've accomplished many great things in the past. We look forward to continuing to do more of the same in the future. 

A recent letter in the Reporter/Democrat from the Emmetsburg Municipal Utilities Board of Trustees summed up the critical situation that faces many small towns with little or no telecommunications competition:

Progress needs to be supported. If we are not trying to grow we are dying. Many small county seat towns in Iowa are suffering economically and shrinking in terms of population and their ability to be viable for their citizens. This initiative to bring local telecommunications ownership back to Emmetsburg is critical in these efforts to maintain and grow our small community.

Countering Crazy Talk, Volume 3, for Episode #62 of Community Broadband Bits Podcast

Lisa Gonzalez and I are back with another back and forth reaction to some of the crazy claims made by opponents of community owned Internet networks. This is something we started with Episode 50 and continued in Episode 55.

For volume 3 of our Crazy Talk series, we address some recent claims made in opinion pieces, including the obviously-written-by-a-lobbyists op-ed in the Baltimore Sun and signed by Maryland State Senator Pugh.

We talk about claims that Chattanooga has failed (in which we recommend you go back to listen to episode 59 - our conversation with Chattanooga.

We dissect the claims that the US already has robust competition and that having several 4G wireless networks in any way impacts the wireline cable and DSL the vast majority of Americans are stuck with it.

And finally, we talk about Provo and why it is suddenly the most cited network by those opposing community owned networks.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

This show is 20 minutes long and can be played below on this page or subscribe via iTunes or via the tool of your choice using this feed.

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Thanks to Break the Bans for the music, licensed using Creative Commons.

Coin-Operated Hypocrisy In Action: A Case Study in Monticello

Rant Warning...

Every state has at least one organization, often calling itself a think tank, that is funded by large corporations to advance their narrow interests, often at the expense of local businesses and the larger public.

Many call these "coin operated" think tanks because they take whatever positions their funders want them to take. Or, a more charitable explanation is that some massive corporations are simply channeling money to those few people who honestly believe that we would all be better off if BP or Comcast or Goldman Sachs had no regulations to worry about.

In Minnesota, one of these is called the "Freedom Foundation" of Minnesota. I tend to ignore them for a variety of reasons.

  1. There just isn't enough time.
  2. They are really, really ignorant. Their papers and posts are so filled with errors in basic fact, it would take a LOT of time to correct them - which brings me back to point 1. (Nonetheless, they are influential because the lobbyists of the companies that fund them distribute their propaganda throughout the capitol that they appear to actually live in.)
  3. Mentioning them can legitimize them.

So here I am, mentioning this group because I just noted a curious example of their utter lack of integrity.

For a few years, the "Freedom Foundation" has worked on telecommunications issues, mostly writing nasty, slanted articles twisting the words of public officials to discredit projects. Given the problems faced by Monticello (as we have covered), they have had a field day there - even tracking down a bondholder that is losing part of his investment.

The fallout from Monticello FiberNet will cost bondholders something like $19 million or about 65 percent of their investment. And the City will likely spend millions in public dollars on the network when it was originally to be paid for entirely by the revenue bonds. This is certainly disappointing. But in Monticello, FiberNet is not the only difficulty - Monticello happens to host one of Xcel Energy's nuclear power plants.

Cost overruns there are taking a $320 million project and turning it into a $640 million project, which will be paid for by ratepayers across Minnesota, including myself.

Yikes, right? I mean if the "Freedom Foundation" is incensed at how unjust it is for Monticello citizens to have to pay for a project they overwhelmingly supported in a public referendum, they must be apopletic about yet another cost overun for a nuclear power plant in the hundreds of millions!

Good luck finding any evidence of that. Maybe they are soooooo furious, they just cannot write about it. Or, more likely, their goal for "freedom" is simply the maximize the freedom of a few big corporations to rip us off because that is how they earn their paycheck. When it comes to Xcel, they seem to only find time to criticize how ratepayer money is spent when it goes to groups they don't like.

Don't worry friends, we'll almost certainly hear back from the "Freedom Foundation" if ratepayers have to spend an extra $.02 on wind turbines.

At the Institute for Local Self-Reliance, we discuss community owned networks honestly. It is a hard business and we have been frank about those communities that have struggled. It is a matter of intellectual honesty - good luck finding any from our loudest and most well-funded opponents.

Bonus Update: Here is another question - where are these supposed defenders of taxpayers when Wall Street is found to be ripping them off? Nowhere. They don't care about how much taxpayers pay, they care about unlimited corporate power for a few.

Responding to More "Crazy Talk" - Community Broadband Bits Podcast #55

Following up on our first "Responding to Crazy Talk" episode last month, we decided to publish a second edition this week. Again, Lisa Gonzalez and I respond to real arguments made by those who oppose community owned Internet networks.

Today, we used three arguments from a debate in 2011 that included myself, Jim Baller, Jeff Eisenach, and Rob Atkinson. We chose three arguments from Rob Atkinson for this audio show but strongly recommend watching the entire debate as it examines these issues from more perspectives.

We deal with the term "overbuilding" and competition more generally to discuss how these arguments are quite detrimental to the best solutions for expanding access in rural areas.

The second argument is the classic one that it is simply harder to build networks in the U.S. because we are such a large, spacious country and that statistics from other countries are misleading merely because they are smaller or more dense.

And the final claim is that subscribers are generally happy with what they have and do not need faster connections.

Let us know if you like this format and what questions we should consider the next time we do it. We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

This show is 20 minutes long and can be played below on this page or subscribe via iTunes or via the tool of your choice using this feed. Search for us in iTunes and leave a positive comment!

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Thanks to Eat at Joe's for the music, licensed using Creative Commons.

Consultant Argues Never Used Financing Mechanism Also Won't Work in Palo Alto

I was troubled to see Broadband Communities publish an odd and misleading story about Palo Alto in the May-June issue [pdf]. Authored by Stephen Blum of Tellus Venture Associates, a consultant that has been hired by Palo Alto in the past, it showed a remarkable level of ignorance about community owned fiber networks and broadband more generally.

The title alone, "Can FTTP Work in Palo Alto?" is just odd. Why exactly would FTTP not work in Palo Alto? It works in hundreds of other cities and towns, most of whom are less well positioned than Palo Alto for such a venture. A more honest title would have been "Consultant Argues Never Used Financing Mechanism Also Won't Work in Palo Alto." Blum made a very good case for that narrow argument but fails to lay out any convincing evidence that a variety of other models are doomed.

Parts of the article can only be called cable and DSL boosterism - such as repeating the talking point that AT&T's U-Verse and Comcast already offer "high levels of service at competitive rates." Competitive to what? Neither can deliver the speeds offered by modern fiber networks and are only "competitive" if one ignores the much slower upstream speeds, higher prices, lesser reliability, problems of oversubscription, and poor customer service one gets from those providers.

Reminds me of "Slick Sam" from Lafayette and the "functional equivalence" between DSL and FTTH.

Blum apparently knows better - that Palo Alto residents are "happy" with the existing services because they have not spontaneously marched down El Camino Real demanding faster speeds at lower prices. This is the wrong measure - reminiscent of the now oft-quoted Henry Ford line that if he asked people what they wanted, they would have said "faster horses."

The number of specific errors in this piece are many, and have been well documented by those familiar with the history of Palo Alto's studies. I want to focus on just a few. Let's start here:

Overall, 79 percent of households would have to pay $3,000 apiece to fully fund FTTP construction costs.

YIKES! Cue the foreboding music! Palo Alto has something like 25,000 households. If 20,000 of them paid $3,000 then the City would have $60 million in addition to its present $14 million dark fiber reserve - a staggering $74 million of theoretical money that has nothing to do with anything. I know of no network that has been built in this manner.

This is an absurd measure for whether a network is feasible. Networks are not financed in this way, partially because, as the author adroitly notes, it doesn't appear likely to work. Community owned networks are financed using a few common methods, most often revenue bonds issued by the utility. Palo Alto's past studies of this approach reflected a desire to avoid that path and the results of those studies in no way determine whether a city owned FTTH network is feasible in 2013 given the present assets and environment.

The user-financed model remains a peculiarity and quite possibly will have a role to play in the future (though almost certainly not to finance the entirety of a system). Palo Alto would be crazy to hinge its decision of whether to invest solely on the feasibility of each home owner paying its full connection cost up front.

Palo Alto Logo

In examining the likelihood of success for Palo Alto, it makes sense to consider similar communities that have made the investment:

Although there were some apparent FTTP successes (for example Bristol, Va., and Cedar Falls, Iowa), cities that had more in common with Palo Alto, such as Alameda and Provo, Utah, were failing.

There is nothing "apparently" successful about Cedar Falls or Bristol. They are unambiguously stunning successes, with take rates north of 70 percent and have led to thousands of jobs. And both can deliver a gigabit anywhere in town at a moments notice at rates a fraction of what major carriers charge. But he believes Alameda (with an older HFC cable system) and Provo (having to deal with strict state laws not present in California) are more relevant comparisons. There are some 140 other citywide networks that might be more relevant, but Blum ignores them.

google-gig.png

He ultimately concludes that Google's experience in Provo will somehow inform local government decisions around network investments. This is some of the worst advice I have read. First of all, Google's costs are different than any other firm, let alone a local government because it already runs one of the largest fiber networks on the planet (possibly the largest). The most brilliant engineers on the planet work for Google. It doesn't publish its costs and is a private sector firm with far different motivations and incentives than a local government.

In short, there might not be a worse comparison than Google for a local government evaluating its own plan for meeting long term telecommunications needs.

All of this being said, Palo Alto could rationally choose not to invest in a FTTH network. It would have to compete against Comcast and AT&T, who engage in predatory tactics while federal regulators ignore potential Sherman Anti-Trust violations.

Given the many wonderful aspects of the community, particularly for people who don't like winter, maybe DSL and Comcast cable will be good enough for the heart of Silicon Valley. That is their choice, not mine (my wife and I love Minnesota winter). I just hate to see such an imbalanced and inaccurate case made suggesting it could not work.

Responding to "Crazy Talk" - Community Broadband Bits Episode #50

For our 50th episode, we're trying something new: Lisa and I respond to three common claims made by opponents of community owned networks. We owe these three particular arguments to the Executive Director of the trade association of Wisconsin telephone companies. Each of the clips we respond to come from claims he made at a workshop at the 2012 WiscNet conference.

We play a short claim by him and then Lisa and I respond to it. For this show, we look at claims that telephone companies already serve everyone with broadband, that the rapid iteration of mobile phone technology delegitimizes public sector investment in networks, and that public investment "crowds out" private investment.

These are very common arguments offered every time a community considers building its own network, but they are quite weak. As Joey Durel, Mayor of Lafayette, so often reminds us, the big companies don't win by having good arguments. They win by buying steaks and football tickets -- lobbying. Campaign contributions help too.

At any rate, let us know if you like this format and what questions we should consider the next time we do it. We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

This show is 12 minutes long and can be played below on this page or subscribe via iTunes or via the tool of your choice using this feed. Search for us in iTunes and leave a positive comment!

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Thanks to Eat at Joe's for the music, licensed using Creative Commons.