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Siloam Springs, Arkansas Is Weighing Its Options For Citywide Fiber Build
In 2012 the residents of Siloam Springs, Arkansas voted against building their own fiber network after some misleading electioneering by the regional cable monopoly Cox Communications. A decade later and local residents are still frustrated by high prices and a lack of competition, as city leaders are still contemplating what exactly they should try to do about it.
In June, the city released a new report by Finley Engineering and CCG Consulting showing the width and depth of the city’s broadband issues. That report was formally presented at an August city meeting before the city’s recently-formed Broadband Advisory Committee.
Survey Said …
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The survey showed that 11 percent of Siloam Springs residents still lack access to broadband, 77 percent of city residents want greater broadband competition, and 88 percent say they’re paying way too much for broadband service. While residents also complained about sluggish upload speeds and outages, the biggest consistent complaint was high prices.
“The number one issue that came through loud and clear in the surveys is broadband pricing – practically every resident we heard from thinks current broadband is too expensive,” the study authors noted.
Siloam Springs is heavily dominated by a duopoly of just two providers: Centurylink and Cox Communications. But even calling it a duopoly is generous; the city’s survey found that Cox enjoys a 92 percent broadband market share within city limits. The lack of competitive threat reduces any real incentive for the cable giant to lower prices or expand service.
Fiber Referendum Fails in Siloam Springs
In an unsurprising result, voters in Siloam Springs, Arkansas, chose not to build their own FTTH network. The margin was 58% against, 42% for. According to that article, the opponents (bankrolled largely by national cable company Cox) outspent proponents by 3:1.
We previously covered this plan and were concerned that the number one reason identified for proposing the network was to diversify revenue for the local government. Quite frankly, that is a poor reason to go head to head against massive companies like Cox and CenturyLink.
The biggest benefits of community networks tend to be the hard to quantify -- aggregate savings to the community from lower prices from all providers in a competitive environment, increased economic development, better customer service from a local provider, etc. These networks are built to be financially self-sufficient, but we caution against expecting them to be a piggy bank for the local government.
Unlike the successful Longmont approach, where those advocating for the community network engaged others who had been through similar fights elsewhere, it seemed like Siloam Springs preferred not to ask for help. Meanwhile, Cox tapped its nationwide resources to oppose the network, with misinformation like this:
Download the full size flyer here.
Communities that want to build community networks should engage the wider community of community broadband supporters and be prepared for flyers like this one. And when seeking local support, make sure you find messages that resonate. Make sure you read about the grassroots movement in Lafayette in our recent report or how Chattanooga had hundreds of community meetings to explain its plan.
These networks face stiff opposition from entrenched opponents that want to be the sole gatekeepers to the Internet -- ensuring a real choice means doing real organizing.
Download the full size flyer here.
Communities that want to build community networks should engage the wider community of community broadband supporters and be prepared for flyers like this one. And when seeking local support, make sure you find messages that resonate. Make sure you read about the grassroots movement in Lafayette in our recent report or how Chattanooga had hundreds of community meetings to explain its plan.
These networks face stiff opposition from entrenched opponents that want to be the sole gatekeepers to the Internet -- ensuring a real choice means doing real organizing.
Paragould Sets An Example for Another Arkansas Town
Recently, we let you know about the situation in Siloam Springs, Arkansas, population 15,039. The town is now investigating the possibility of building their own fiber network. They have had several community meetings and a "vote of the people" is set for May 22, 2012.
Pamela Hill is investigating the twists and turrns in a series of articles about the vote. In one of her articles, Hill looked into another Arkansas community, Paragould, home of the annual "Loose Caboose" Festival. This community, located in the northeast corner of the state, has successfully operated their own cable network since 1991. Unlike Siloam Springs, the people of Paragould weren't focused first on generating new revenue for the local government, they just wanted to be able to watch tv for a reasonable price.
Back in 1986, Cablevision was the only provider in Paragould. Hill spoke with Rhonda Davis, CFO of Paragould Light, Water & Cable:
"The public wasn’t happy with Cablevision’s service or rates,” Davis said. “We took it to a public vote and did it.”
Prior to Paragould's decision to build their own network, the City had a nonexclusive franchise agreement with Cablevision. The town was dissatisfied by the service they received and, in 1986, Paragould voters approved an ordinance authorizing the Paragould Light and Water to construct and operate a municipal cable system. Three years later, there was a referendum that authorized the city to issue a little over $3 million in municipal bonds to finance the system.
That same month, Cablevision filed suit alleging antitrust violations, breach of contract, and infringement of first and fourteenth amendment rights. The district court dismissed the antitrust and constitutional claims and Cablevision appealed unsuccessfully. The case attracted attention from lawyers and business scholars across the country.
Arkansas Town Targeted by Cox Prior to Community Broadband Referendum
Siloam Springs, sporting 15,000 people in the northwestern corner of Arkansas, could be the next community to build its own community fiber network. But first they have to pass a referendum in May in the face of stiff opposition from Cox Cable, which would prefer not to face real competition.
For over 100 years, the city has provided its own electricity via its electrical department. Now, it wants to join the more than 150 other communities that have done so. After last year's changes to Arkansas law, Siloam Springs has the authority to move forward if it so chooses.
Pamela Hill at the City Wire has covered the situation with a series of stories, starting with an explanation of why they are moving forward:
David Cameron, city administrator, said the proposal is not so much about dissatisfaction with current providers as it is about finding new revenue for the city. Cameron said revenue from electric services has been a key source of funding for various projects and necessities for the city. That “enterprise” fund is getting smaller, Cameron said, and an alternative funding source is needed. “We have done a good job managing accounts, building a reserve,” Cameron said. “We want to keep building on the programs we have. It takes money and funds to do that.” City officials discussed the issue for the last 18 months and decided to put it to a referendum. Voters will decide the issue May 22.That is a fairly unique reason. Most communities want to build these networks to encourage economic development and other indirect benefits to the community. Given the challenge of building and operating networks, few set a primary goal of boosting city revenue.
If approved by voters, the city plans to spend $8.3 million to install 100 miles of fiber optic cable directly to homes and businesses. The city should be able to repay the debt in 12 years, if things go according to a feasibility study presented to the city’s board of directors in January.