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Natural Monopoly in North Carolina: The Need for Community Networks and Competition

As the North Carolina Legislature considers HB129 and S87 to greatly limit community broadband networks (we analyzed the bill here), it is worth taking a step back to understand why companies like Time Warner Cable provide broadband that is unreliable and comparatively both slow and costly without having other companies come in to offer a better product. The problem is basic economics: the problem of natural monopoly. Ever wonder why you generally don't have a choice between two major operators like Comcast and Time Warner Cable? They have carved up the market due to the costs and difficulty of directly competing with one another. Some folks have a choice of cable companies -- RCN and Knology, for instance, have been successful overbuilders in a few regions (though they went through troubles far worse than most public networks that have been termed "failures"). But for the most part, overbuilding an incumbent cable company is all but impossible -- especially for a private sector company looking for a solid return on investment inside a few years. In the face of a new cable entrant, massive companies like TWC start lowering prices, offering cash or other enticements, and lock both residents and businesses into contracts to deny the entrant any subscribers. Companies like TWC can do this because they have lower costs (through volume discounts for gear, content, and even marketing synergies as well as because they long ago amortized the network construction costs) and can take losses in one community that are cross-subsidized by profits from non-competitive areas. New entrants, both private and public, have higher costs as well as a learning curve. 

Chattanooga's Gig Gets More Attention - Telecom TV

Guy Daniels heads to Chattanooga to learn about the best broadband network in the country -- interviews with Katie Espeseth (VP of EPB Fiber Optics) and Harold DePriest (President and CEO of EPB) from Telecom TV

Chattanooga Smart-Grid Receives Record Recognition

We've been raving about Chattanooga' FTTH network and smart-grid for quite some time now, but others are just learning about it. Chattanooga's Electric Power Board serves some 170,000 households and businesses across 600 sq miles. Though we have mostly focused on the triple-play benefits of the network

Chattanooga had been named one of the 2011 Top 21 Intelligent Communities of the year previously, but more recently made the cut to a Top 7 Intelligent Community. Time will tell if is awarded the Intelligent Community of the year.

Green Tech Media covered the completion of the network pass and activation of electric grid smart switches at the end of 2010.

[A]ll of its 170,000 electricity customers could benefit from the infrastructure. The network will serve as the conduit for 80 billion data points on electricity use per year that could help the utility run more efficiently, reduce outages, and give customers more control over their monthly electricity expenses.

“Chattanooga is the epicenter of energy technology,” said Harold DePriest, president and CEO of EPB. “One of our biggest jobs is to exploit this technology for the benefit of our community.”

With power outages previously taking a $100 million/year bite out of private businesses served by EPB, the new FTTH network will enable a much smarter network that will radically decrease those outages and thereby make businesses more productive. By mid 2012, businesses will see a 40% decrease outage time. Over time, as EPB's grid grows ever "smarter," those losses will likely decrease further while also providing energy users (residential and business) more opportunities to manage their power consumption.

For those who only associate the smart-grid with enabling time-of-use pricing (paying more electricity during periods of high demand), there are other important, if hidden benefits:

Leo Laporte and Bob Frankston: The Past and Future of the Internet

Big cable and phone carriers want to take credit for what the Internet has become -- but they never wanted it to be open.  Smart decisions behind the scenes by people like Bob Frankston have allowed the open Internet to flourish despite the big carriers.  In Frankston's case, it was creating the router that allowed home users to put any device, and number of devices they wanted, on their network connections when the carriers wanted to charge for every device.

 

Dave Burstein Reflects on FCC Policy

Dave Burstein of DSL Prime is interviewed on a recent episode of America's Report on TelecomTV.

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Tired of Dealing with Bad Customer Service? Get Even...

Though we in the U.S. often praise the policies in Europe that have given them faster speeds, lower prices, and actual choices in the market, the reality is that some of their companies have just as bad customer service as what we have to deal with from massive incumbent providers. This video features an incredible prank, forcing an offending company to deal with terrible customer service. Subtitles translate the audio into English.

Problem of Scale Hurts Frontier with FiOS

Frontier has been bitten by the same disadvantage many communities face when building their own networks -- little market power means having to overpay for everything. When Frontier bought millions of Verizon rural lines, it bought a few FiOS connections as well. But not enough to gain any bargaining power with channel owners. So Frontier had to raise the costs of its video services up for 46%. Lest anyone feel too sorry for Frontier, they are doing just fine. It is their customers who suffer. But it is a reminder that the issue of scale and market power are barriers to all competition, not just community networks. If we want to have real competition in this country, the Congress and the FCC need to stop ignoring the problems caused by massive players distorting the market. This unregulated market is an invitation for big players to join together and screw everyone else.