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Fast, affordable Internet access for all.
“We already said in the first four years, we would not break even,” City Councilman Brian Miller said. “That’s not a surprise to anyone.” According to documents, the city expects Fibrant to become cash-flow positive after four years. The city billed the first Fibrant customers one year ago in December 2010. The city expects Fibrant to eliminate its deficit as more people sign up and revenues increase. The utility, which competes with private providers like Time Warner Cable, has a 13 percent market share, interim City Manager Doug Paris said, and is billing about $200,000 a month. “We’re growing in what is an extremely tough market,” Paris said. Paris said after the meeting Fibrant has about 1,600 customers. The utility needs about 4,500 to become cash-flow positive.Salisbury has a new mayor coming into office, but he is a supporter of the network, as was the outgoing mayor, who spent a significant amount of time defending the community network from Time Warner Cable's attacks via the state legislature.
In 1889, Statesville, N.C., opted for self-reliance by building its own municipal power system after failing to attract an investor-owned utility. Half a century later, said Bowen, most American farms still lacked electricity, so Congress passed the Rural Electrification Act of 1936 to help finance nonprofit rural electric cooperatives. In the 1980s, Morganton, N.C. opted for self-reliance by expanding its municipal power system to offer cable TV, after years of complaints – including the 1982 blackout of the UNC-Georgetown national championship game – about its commercial cable provider. Bowen cautioned that corporate interests often oppose local communities which “self provision” critical infrastructure. Morganton’s commercial cable-TV provider sued the city to block its cable venture. Only in 1993, after a decade-long legal battle, did Morganton win the right to self-provision cable TV. Today, Morganton’s municipal cable system offers broadband Internet access at competitive rates and with no contract.Unfortunately, the North Carolina Legislature has made it much harder for local governments to build the necessary networks (as a favor to Time Warner Cable, which just happened to have given massively to many of the candidates). But Wally has an answer -- nonprofit approaches that have been inspired by rural electric cooperatives. MAIN is making important investments in western North Carolina and should be recognized as making a difference in a region the private sector has largely abandoned.
At their monthly board meeting at Davidson’s Town Hall on September 22, Transition Manager David Auger said that, from July through September, the system had increased its voice customers by 48 percent over the first quarter last year, its video customers by 296 percent and its data customers by 2,248 percent. 83 days of the gains, said Auger at the time, were actual, and 9 were projected, since September was not yet over. The final customer numbers, which the system released today, showed that the last few days of September growth activity exceeded projections: voice customers grew by 60 percent over the first quarter last year, video customers by 319 percent, and data customers by 2257 percent.This network was targeted time and time again by Time Warner Cable and its allies in pushing the anti-competitive bill that has effectively stopped any investment in next-generation networks in the state by killing local authority to make broadband investments. They regularly blamed the network's problems on the local governments owning it while providing no context -- the network was in terrible shape because its prior private-sector owner saw little reason to invest in it. The network is now far superior because the local governments care more about encouraging economic development and creating local jobs than producing a quick profit for out-of-state shareholders. As MI-Connection continues to correct its problems, Davidson's government is remarkably open and transparent. You can read just about all the documents relating to the network, finances, and history here.
The city will order 5,000 additional set-top boxes for Fibrant at the discounted price of $721,572… Fibrant’s original inventory of 5,000 set-top boxes purchased in March 2010 is running low, Behmer said. The city’s new broadband utility, which sells Internet, cable TV and phone services to Salisbury residents, has about 1,200 customers and averages about three set-top boxes per home, he said.This is a reminder of the economics of these networks. Each set-top box costs something like $150. Household that subscribes for television service average 3 set-stop boxes, meaning that the cost of those boxes alone is about $450 of loss to Fibrant before the subscriber pays a dime to Fibrant. This is why muni networks take so long to break even. The additional install costs like the equipment on the side of the house and the labor to set everything up grow quickly -- often to between $1200-$1500 per subscriber. It takes years to pay down those costs, plus the interest of borrowing to build the network. So when you hear that a community network is running in the red in year 3, you should say, "Duh." Infrastructure often takes a long time to pay off, which is one of the main reasons the private sector does such a poor job of providing it.
MCNC is a private, nonprofit organization that runs the North Carolina Research and Education Network. The organization secured two grants through the U.S. Department of Commerce’s Broadband Technology Opportunities Program (BTOP) to fund the infrastructure. Broadband Technology Opportunities Program funds make up $75.75 million of the funding for this phase; MCNC raised $28.25 million privately, including $24 million from Golden LEAF Foundation. The total project includes more than 2,000 miles of broadband infrastructure to be outfitted through 69 counties in North Carolina. “The great work being done here … is going to be able to be shared over the world,” said Freddoso [CEO of MCNC]. Freddoso said MCNC has had conversations with the city of Salisbury, distributor of Fibrant cable and Internet service. While the new fiber optic infrastructure will not provide service directly to customers, MCNC will offer wholesale broadband to companies like Time Warner Cable and municipalities that run their own services, like Salisbury.While we are always happy to see libraries and schools getting access to the connections they need at affordable prices, we believe some of these state-wide educational networks can be counter-productive. Schools and libraries should be anchor tenants on networks owned by the local community (ownership options include coop, nonprofit, or muni ownership).
As stated above, S.L. 2011-84 imposes some significant limitations on a municipality’s authority to provide cable and Internet services. With some exceptions, the limitations apply to a “city-owned communications service provider.” A city-owned communications service provider is defined as:Though it is an extreme long shot, it would be fascinating to see a community build a network without charging a direct fee to access.This definition is important because the new limitations only apply to municipalities that meet all of its elements. In particular, the Act’s provisions only apply to a municipality that provides the listed services “for a fee.” That means that the requirements do not apply to any municipality that provides the above-listed communication services for free to the public. Many local governments provide free Wi-Fi service in their downtown or other central business areas. (In fact, I am taking advantage of Town of Carrboro’s free Wi-Fi as I draft this post.) If a municipality uses its unrestricted general fund revenue to finance this service, or any other communications services, it is not subject to the new Act’s provisions. (Note that many local governments actually offer this service by taking advantage of excess capacity on their internal broadband networks.)
- a city
- that provides cable, video programming, telecommunications, broadband, or high-speed Internet access service (collectively, communication services)
- directly, indirectly, or through interlocal agreement or joint agency
- to the public
- for a fee
- using a wired or wireless network (communications network).
I have long been a fan of Larry Lessig's work, so I was proud to see him use our work as the foundation for his presentation at the 2011 Personal Democracy Forum. He talks about the fundamental right of communities to build their own networks as well as Time Warner Cable's successful purchase of competition-limiting legislation in North Carolina.