In a situation similar to the Frontier letters to Sibley we published last week, the cable company Mediacom has sent letters to Silver Bay and Two Harbors in Lake County to scare them into abandoning the rural county-wide FTTH network that they are building with federal broadband stimulus aid.

Interestingly, rather than sticking to the normal fear, uncertainty, and doubt (FUD) campaign, Mediacom apparently based its threats on a draft previous version of the joint powers ordinance rather than the language actually passed by the resolutionsincluded in the current JPA. Whoops.  [See Update below]

Mediacom, perhaps you should focus on improving your networks rather than stifling potential competition.  Please send us copies of letters your community network has received from incumbent providers.

Without further ado, here is the letter [download pdf] sent to Silver Bay and Two Harbors on December 21, 2010 by Tom Larsen, VP of Legal and Public Affairs for Mediacom:

Re: Joint Powers Agreement with Lake

County Dear Mayor Johnson:

Mediacom prides itself in being one of America's leading providers of telecommunications services to small and medium sized communities. As you may be aware, Mediacom offers a highly competitive suite of high-speed Internet, cable television and phone services to homes and businesses throughout Silver Bay (the "City").

It has come to our attention that the City passed a resolution on November 15, 2010 approving a Joint Powers Agreement with Lake County (the "JPA"). Given the significant private capital that Mediacom has invested in order to make advanced telecommunications services available throughout the City, we were extremely surprised to learn that your resolution approving the the JPA includes the following finding in Section 4(e):

Update: We have covered the second round of financing from ECFiber here.

The East Central Vermont Fiber Network, connecting some 23 rural towns, announced back in July that they would self finance a pilot project as a preliminary step to securing the full funding for the project.

Right around Thanksgiving, last year, David Brown updated the community on progress via an article in the Vermont Standard:

It would have been terrific to get the $50million needed to build out all 35,000 telephone and electric poles with 1,500 miles of fiber optic cable. Along the way, we learned an important lesson. We noticed that government money went to existing telephone companies to expand existing networks rather than funding start-ups like ours. That’s when the ECFibernauts decided on a change in strategy: build a small network, get a few real customers, and deliver rock-solid ultra-fast Internet to them as a proof of concept – all using our own money. Then, when all the critical components are up and running, go to the commercial markets for funding needed to expand out to all 23 towns.

The ECFiber Governing Board and our technology partners ValleyNet, Inc. are fortunate to have several experienced financiers within our ranks. Working with our attorneys (to keep everything legal) ECFiber is reaching out to the community with a private offering of tax-exempt promissory notes. As of this writing, we have raised more than three-quarters of what is needed to complete Phase I of our project. The ECFiber hub is now under construction on Waterman Road in Royalton and an initial pole attachment application for 500 poles is being processed. Phase I will bring ECFiber service to selected businesses, schools, town facilities and residents in Bethel, Barnard, Stockbridge and Royalton.

The fiber-to-the-farm initiative in Sibley County, Minnesota, has completed the feasibility study and the towns involved are discussing a Joint Powers Agreement. One of the impacted incumbent providers -- Frontier Communications, a rural telco famous for slow DSL) -- has started to spread the usual FUD (fear, uncertainty, and doubt) that is common whenever a massive company is about to face competition.

Though I am tempted to comment directly on Frontier's letter, I'll let the community's response stand on its own. The way they misrepresent the record of Windom should be instructive - this same misinformation strategy is used around the country.  We believe publishing these scare tactics and responses to them is helpful to everyone -- so if your project has received one, please let us know.

Frontier's Letter:

Dear Commissioners:

As a provider of telephone, internet, and video services to our customers in the Green Isle, Arlington, and Henderson areas, Frontier Communications is obviously interested in the "fiber to the home" proposal that has been presented. As a nationwide provider, Frontier is aware of other efforts by municipalities of various types to build and operate their own telecommunications network. While these proposals are always painted in rosy tones, it is important for officials to carefully review the underlying assumptions and projections that consultants make when presenting these projects. Unfortunately, history tells us that the actual performance of most of these projects is significantly less positive than the promises. Often times, these projects end up costing municipalities huge amounts of money, and negatively impact their financial status and credit ratings.

A nearby example would be WindomNet, the city-owned network in Windom, Minnesota. That network, which provides telephone, internet, and video service, began in 2005. The financial results to date have been poor; operating losses of $662,000 in 2006, $1,257,000 in 2007, $326,000 in 2008, and $93,000 in 2009. Additional borrowing by the city was required to make up those losses.

MuniNetworks.org is happy to welcome a new contributor to the site, Mitch Shapiro.  Mitch will author pieces from time to time, the start of our efforts to broaden the contributions to and reach of MuniNetworks.org.  If you are interested in contributing on a one-time or semi-regular basis, please let us know at broadband@muninetworks.org.

Mitch Shapiro has been an analyst, author and consultant in the telecom, media and broadband industries for more than 25 years. His interest in community-controlled networks dates back to his graduate school days at Michigan State University, which included two internship in Washington DC, the first helping to draft a manual for local communities wanting to deploy a cable TV cooperative, the second working for Intelsat, a cooperatively organized global satellite network. That interest remains strong today, and is informed by more than two decades of experience analyzing broadband technologies, business models, competitive dynamics and economic impacts.

Mitch currently serves as CEO of Broadband Market Analysis, a research and consulting firm, and Rural Fiber Works, which supports cooperative and municipal utilities in developing strategies for open-access community fiber networks. He is also a consultant with Strategic Networks Group, a leader in helping public and private entities understand and maximize the economic benefits of broadband networks.

More than 50 elected officials -- county commissioners, city council members, township board supervisors -- gathered in the Arlington Community Center last night to inch ahead a plan to lay fiber optic lines to every home and business in the county plus those in and around neighboring Fairfax in Renville County. It's an ambitious plan that would require the community to borrow $63 million and then pay off those bonds with revenue from the service. The county-owned operation would offer the usual cable-phone-Internet triple plays, and backers are promising that right out of the gate it would be at a speed of 20 megabits per second, upload and download. That's quite a bit faster than what area residents get now via DSL or cable or wireless.

By the end of February, the 10 governments -- Sibley and Renville counties and the cities of Gaylord, Arlington, Winthrop, Fairfax, Henderson, Gibbon, Green Isle and New Auburn -- will each decide whether they want to create a joint powers board.

Passing the MLP legislation creates a new town department, and does not require a town to produce or sell electricity. The Selectboard can choose to oversee its MLP department themselves or appoint a three to five member board. This group is responsible for appointing a manager, making decisions around the town’s participation and representation in the WiredWest Cooperative, and filing annually with the State. Creating the MLP incurs no cost to the town. If a town decides to join the WiredWest Cooperative, there will be a membership fee of not more than $1,000 per town.

Like the debate over whether the meetings being held to draw up the rollout plans for the county should be public or private, NPB needs to better apply the rules of working within the expectations of open government. We demand transparency and a full accounting of tax dollars. It’s fair to wonder, as some board members did last week, just what NPB would withhold from the board if things don’t go swimmingly with the Lake County plan.

Ontario County was working on a publicly owned solution to Middle Mile long before the broadband stimulus approach made it popular. And now, before most of the stimulus money has been disbursed, they have completed an expanded version of their initial plan.

To date, Axcess Ontario has signed master agreements with eight telecom and broadband companies, including Verizon Wireless and national broadband provider tw telecom. Axcess Ontario is in continual discussions with other service providers, and is working aggressively on its next goal of luring a fiber-to-the-home (FTTH) service provider to Ontario County. With the fiber ring complete, businesses and municipalities now have access to faster and less expensive broadband, as well as bandwidth equal to global broadband leaders. Businesses can gain access to the ring simply by contacting any of the eight service providers that work with Axcess Ontario. Residents do not yet have access to faster and less expensive broadband, but they will once a FTTH service provider is secured. Axcess Ontario has been working to lure a FTTH provider for more than a year, including submitting an application on behalf of Ontario County, NY, to Google's "Fiber for Communities" ultrafast broadband project earlier this year. More than 1,100 communities nationwide responded to that project, and Google just announced last week that it was postponing its selection of winning communities to early 2011.

We will be interested to see if they can lure a FTTH provider -- though middle mile can lower the operating costs of providing such a service, the capital costs are not significantly changed. And with the robust middle mile already connecting community anchor institutions, a new FTTH provider cannot count on those high-revenue customers. We have seen this previously in Alberta, Canada. Axcess Ontario is an example of a good public-private partnership - as noted in Telecompetitor:

“We’re going through the VRA pool which helps fund 88 cities and service authorities. Because of that – and because of the market – we’re potentially looking at very low interest rates of 3.3 percent,” Rose told the board during his presentation.

1. Restructuring debt is not necessarily a sign of weakness -- BVU's OptiNet is quite successful.
2. A reminder that small communities can benefit significantly by pooling bonding through programs like Virginia's VRA. States should help communities to work together in this way.

Sixty-four percent of 450 randomly chosen Chelan County registered voters who were part of phone survey in August said they favor taking the grant and completing the buildout, even if it means their electric bills will go up by as much as 3 percent — about $1.50 more on a $50 per month power bill.