When Monticello, Minnesota, decided to build its community fiber network -- Fibernet Monticello -- it expected the incumbents to lower their prices and fight to keep subscribers. But Monticello had no idea the lengths to which they would go.
The telephone incumbent, TDS, delayed the project for a year with a frivolous lawsuit and then built its own fiber-optic network while dramatically lowering its prices. We have yet to find another community in North America with two citywide FTTH networks going head to head.
Because of the city's network, Monticello's residents and businesses have access to better connections than the biggest cities in Minnesota can get.
Now, Charter has weighed in by cutting its rates to what must be below cost to gain subscribers. It reminded us of a shoot-out, so we created this infographic to explore what is at stake.
Download a higher resolution PDF here.
Charter has taken a package for which it charges $145/month in Rochester, Duluth, Lakeville, and nearby Buffalo (MN) and is offering it for $60/month - price guaranteed for 2 years. A Monticello resident supplied us with this flyer, which this person had received multiple times at their home over the course of a month. (See below for the full flyer).
This is either predatory pricing or the cable industry is out of control with its rate increases. If that package costs Charter more than $60/month to supply, then it is engaging in predatory pricing to drive competitors out of the market. Consider that Charter may be taking a loss of $20/month ($240/year) from each household that takes this offer. They can do that by cross-subsidizing from nearby markets where they face very little competition.
If that package costs $60 or less per month to Charter, then it has an incredibly high profit margin and the fundamentals of the market have to be questioned.
Traditional economic theory tells us that very large profits anywhere will attract new market entrants. Yet the private sector refuses to provide competition aside from the common duopoly of DSL/cable. And these companies use their incredible lobbying power to push bills such as Minnesota HF 2695 that would ban communities from building their own networks.
Unfortunately, building their own networks is often the only way for communities to create real competition and investment in next-generation networks. But communities then have to face dirty tactics from these massive companies bent on maintaining their marketshare using any means necessary.
The aggregate benefit to Monticello is very large right now. Prices for telephone, cable, and broadband have all dropped, keeping millions of dollars in the local economy. But Fibernet Monticello has missed its revenue targets because TDS and Charter care more about driving competition out of town than a fair fight.
The question is whether dirty tactics will successfully run Fibernet Monticello out of business, allowing TDS and Charter to resume gouging subscribers with their ordinarily high rates. If they do, it will be ironic that FiberNet Monticello, which brought the fastest residential speeds in the nation to a small Minnesota town while lowering the prices everyone pays for telephone, broadband, and cable, will be regarded as a failure.
At a recent Martinsville City Council meeting, the council offered unanimous support for a phased expansion of the city’s Municipal Internet Network (MiNet). What exactly the expansion will look like, and how it will be funded, very much remain a work in progress. Despite having been first constructed in the 1990s, Martinsville’s MiNet only has about 376 customers in a city of nearly 14,000 residents. There’s roughly 20 users currently on a multi-month waiting list, eager to get access to affordable fiber at speeds up to a gigabit per second (Gbps).
In January, we released our new census of municipal networks in the United States for 2024, and the significant growth that we've seen over the last two years as more and more cities commit to building Internet infrastructure to add new tools for their local government, incentivize new economic development, and improve connectivity for households. The trend has not gone unnoticed by the monopoly players and their allies, and a new short documentary by Light Reading does a great job of outlining the stakes for local governments, residents stuck on poor connections, and the incumbents as the wave of municipal networks grows.
Eagle, Idaho is preparing to connect the first of the city’s 32,000 residents to a new, municipally-owned open access fiber network. The project, which the city says will take between five to 10 years to complete, is being heavily funded by federal grants, and aims to meaningfully boost broadband competition – and affordable access – citywide.
Boulder, Colorado officials have issued a new request for proposal (RFP) seeking partners for their ongoing quest to deliver affordable fiber to the city of 104,000. The city is offering potential partners a long-term lease of city-owned dark-fiber backbone infrastructure and a right of way agreement for the construction and operation of a network delivering gig speed or more to all Boulder homes and businesses.
Los Angeles becomes first city in the nation to define digital discrimination at the local level in the wake of the new rules issued by the Federal Communications Commission to prevent digital discrimination. Other cities from Oakland to Cleveland are also leveraging the new FCC rules for local action.
As the new year begins, the Institute for Local Self-Reliance (ILSR) announced today its latest tally of municipal broadband networks which shows a dramatic surge in the number of communities building publicly-owned, locally controlled high-speed Internet infrastructure over the last three years. Since January 1, 2021, at least 47 new municipal networks have come online with dozens of other projects still in the planning or pre-construction phase, which includes the possibility of building 40 new municipal networks in California alone.