Monticello Minnesota may be located 40 miles outside Minneapolis, but it is the center of the planet when it comes to FTTH competition. We have tried and cannot identify another community localed on planet earth with two separate FTTH networks going head to head across the entire community.
We have long written about Monticello, most recently to look at hypocritical criticism of the project (which gives me an opportunity to note a similar dynamic in Lafayette, Louisiana). And we have covered the disappointing news that the network has not produced enough revenue to make full bond payments.
Short explanation for how Monticello came to be unique in having two FTTH networks: Monticello had poor Internet access from Charter and telephone company TDS. Each refused to invest after local businesses and elected officials implored for better networks. Monticello started building its own FTTH network (Monticello FiberNet) and TDS sued to stop the project while suddenly decided to upgrade its slow DSL to fiber. Lawsuit was tossed out and Monticello finished its network.
In most community fiber networks, the DSL provider seems to fade away because it cannot offer the fast speeds of fiber or cable, so the market basically remains a duopoly with the community network replacing the telephone company (which continues to offer cheap, slow DSL to a small number of customers). But in Monticello, Charter and TDS engaged in a price war, which has really hurt the City's ability to generate enough revenue to pay its debt.
Price wars are very hard on new market entrants because they have to amoritze the cost of their investment whereas the incumbents often have already done so. This means incumbents can almost always offer lower prices if they are determined to do so.
In many communities, we have lacked clear evidence of predatory pricing - that is pricing below the actual cost of service to run competitors out of business. This would violate federal law (if any agency bothered to enforce it). Charter gave us that evidence in Monticello.
Since then, the deals have remained amazing in Monticello, far surpassing what cable-funded crazy people in DC pretend is competition between DSL and cable in the majority of the country.
TDS is now offering a deal that far surpasses anything available in the Minneapolis/Saint Paul metro - over 190 channels (including DVR and HD), 50 Mbps Internet (50 down, 20 up I believe), and telephone for $70/month for one year with no contract. The price goes up after year one, but doesn't go back to full price until after year 2 ... at which point you will likely get another deal if there are still more than 2 high speed choices in the market.
TDS is also regularly running full page advertisements regularly in the local newspaper. How many local newspapers would love to see regular big-ad buys like this one? If enough communities build networks, perhaps the resulting advertising bumps will help local newspapers stay in print!
Charter has gone beyond newsprint and static billboards with a big truck advertising Monticello residents a free DVR that will save them $650/year (which is phrased in a way that makes you think they are charging WAYYYY too much for DVRs!).
These advertising strategies are in addition to many door-to-door sales people from both TDS and Charter. Both are boosting local employment opportunities for these sales people far beyond what they would do absent Monticello FiberNet.
Existing Charter customers outside of Monticello might be interested in how cable promos in Monticello compare to in their communities where there is no real competition for the cable giant. Here is an 8 page glossy advertisement they have been using [pdf].
Charter is also going after small businesses with a 30 Mbps asymmetrical package for $55/month when bundled with business phone. I can only imagine how many businesses in areas without a real choice would like that deal.
However, the Monticello FiberNet business service is far superior, particularly as it is symmetrical and fast upstream makes a huge difference for local businesses. Business services from the city owned FiberNet starts 10 Mbps symmetrical at $41.95 and the list sheet tops out at 100 Mbps for $350/month.
Update: Fibernet Business Services prices have decreased on the faster Internet connections. 30 Mbps symmetrical is $99/month and 100 Mbps symmetrical is $199/month.
We don't have enough information to compare what it would cost a business to connect multiple sites with point to point gigabit links, but we would guess there could be more than $1,000 savings each month from such a service based on FiberNet pricing vs Charter or TDS.
Going through all these deals, a few things have become apparent.
First, DSL and cable are not engaged in real competition. Adding a third player really changes the market in ways that satellite and 4G wireless Internet do not.
Second, most of the competition from the big corporations is aimed at taking subscribers from rivals by temporarily lowering prices rather than attempting to keep their own subscribers happy with their services. Most of the deals are only available to new customers, incentivizing households to regularly switch providers, which is costly to all competitors (churn). Community owned networks by contrast tend not to offer these short term promo deals and invest in keeping existing subscribers happy.
Third, the strategy of TDS and Charter would not be possible if they were not cross-subsidizing from distant, non-competitive markets. They may not be losing money on all the customers that take these deals, but the increased marketing costs and extremely low priced deals are aimed at driving a competitor from the market, not at merely preserving market share. Their ability to cross-subsidize (and the initial frivolous lawsuit) have damaged Monticello's business plan to the point where it has had to transfer public funds from the liquor store and negotiate with bond holders over a significant haircut.
And finally, whatever this network may end up costing city taxpayers, it will likely be less than the savings from all of these lower prices and indirect benefits such as not losing employers that could not be competitive when only having last-generation Internet access from unreliable DSL. That doesn't help the City to make its debt payments, but it sure makes Monticello a better place to live.
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).
Ottawa County, Michigan officials say they’ve struck a new public private partnership (PPP) with 123Net on a $25 million fiber deployment that aims to bring more uniform – and affordable – broadband access to Michigan’s seventh largest county by population.
Golden, Colorado has struck a new right-of-way agreement with Google Fiber that should expedite the competitive delivery of affordable fiber to the city of 20,000. The deal gives Google Fiber non-exclusive access to public right-of-way to build a commercial broadband network, though it delivers no guarantee of uniform access across the entire city.
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.
Colorado has long been home to some of the most innovative municipal broadband projects in the country. It’s now being buoyed by a massive new wave of state grants that should further expand affordable broadband to long-neglected parts of the state. Larimer County in particular – home of some of the most disruptive municipal broadband operations in the country – got a major infusion of new funding for several community-owned providers working to bridge the digital divide.