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Municipal Networks and Small ISP Partners to FCC: Title II Not a Problem

A group of municipal leaders and their private sector small ISP partners submitted an ex parte filing with the FCC today stating that they see no reason to fear Title II reclassification of Internet access. The statement, signed by a variety of towns and providers from different areas of the country is reproduced in full:

Dear Chairman Wheeler,

As a group of local governments and small ISPs that have been working to expand the highest quality Internet access to our communities, we commend you for your efforts to improve Internet access across the country. We are committed to a free and open Internet without blocking, throttling, or discriminating by ISPs.

As local governments and small ISPs, we wanted to ensure you are aware that not all local governments and ISPs think alike on matters like reclassification. For instance, on July 18, 2014, the mayors of New York City; Portland, Oregon; and San Francisco called on you to issue the strongest possible rules to guarantee Net Neutrality. Each of these communities is also taking steps to expand and improve high quality Internet access to their businesses and residents.

Our approaches vary but are already resulting in the highest level of service available because we are committed to expanding high quality Internet access to supercharge local economies and improve quality of life. We have no interest in simply replicating older triple play model approaches. We want to build the infrastructure of the future and we see nothing in the proposed Title II reclassification of Internet access that would hinder our ability to do that. As Sonic CEO Dane Jasper has strongly argued, ISPs that don’t want to interfere with their subscribers’ traffic should expect a light regulatory touch.

We thank you for your leadership during this difficult period of transition. We understand that many of our colleagues have trouble trusting the FCC given a history that has, in many cases, ignored the challenges small entities face in this industry. But whether it has been increasing the speed definition of broadband, or calling for the removal of barriers to community networks, we have been impressed with your willingness to take on powerful interest groups to ensure the Internet remains a vibrant, open platform.

We look forward to working with you to ensure that future rules recognize the unique challenges of small providers and innovative approaches to expanding access.

Sincerely,

An Update on Utah's UTOPIA Open Access Network

For the facts on all things UTOPIA, we turn to Jesse Harris at FreeUTOPIA.org. In his latest post, he provides an excellent bullet list of the key factors in Macquarie's Milestone 2 proposal. An excerpt From his post:

  • The final cost per address is estimated at $22.60 per month. Macquarie estimates that re-working the deal to account for five cities bowing out trimmed the cost by $8.57 per month.
  • The revenue split is much more generous than I expected, allowing the cities to keep 75% of wholesale revenue after the first $2M per year. It’s expected to completely cover the debt service by 2021 with just a 24% take rate for premium services.
  • The basic level service has also been improved. Instead of 3M/3M service being included at no extra cost, it’s been bumped to 5M/5M. This matches Google Fiber speeds on the free tier. The data cap stays put at 20GB per month.
  • Almost all of the network revenues are being driven by Veracity, XMission, and SumoFiber. Other ISPs are very small by comparison.
  • The majority of currently connected users are in opt-out cities. This only reinforced that the votes there were “we got ours” selfishness.

Jesse has also managed to obtain a draft copy of the Milestone Two Report and has it posted for your review at his blog.

Recently, the network settled a long running dispute with the Rural Utility Service (RUS), reported the Standard Examiner. UTOPIA was awarded a $10 million settlement in a lawsuit filed in September 2011.

A November Salt Lake Tribune article reported that the RUS encouraged UTOPIA to seek federal loans in 2004 but took 19 months to approve the first payment, generating unanticipated expenses. Later, the agency withdrew promised funding with no formal reason. 

Community Broadband Media Roundup - December 12, 2014

This week in Community Broadband networks... partnerships, cooperatives, and going-it-alone. For a background in muni networks, check out this recent article from FiscalNote. The article highlights Kansas and Utah's fight for improving beyond the minimum speeds. 

Speaking of minimum, the FCC announced its new "rock bottom" for regulated broadband speeds. Ars Technica's Jon Brodkin reports that despite AT&T, Verizon, and the National Cable and Telecom Association's protests, ISPs that use government subsidies to build rural broadband networks must provide speeds of at least 10 Mbps for downloads.

Rural Americans should not be left behind those who live in big cities, the FCC announcement today said. "According to recent data, 99 percent of Americans living in urban areas have access to fixed broadband speeds of 10/1, which can accommodate more modern applications and uses. Moreover, the vast majority of urban households are able to subscribe to even faster service," the FCC said.

The FCC plans to offer nearly $1.8 billion a year to carriers willing to expand service to 5 million rural Americans. 

This is a step in the right direction, but we are alarmed to see a download:upload ratio of 10:1. People in rural areas need to upload as well as download - our comments to the FCC strongly recommended raising the upstream threshold as well and we are very disappointed to see that remain a pathetic 1 Mbps.

And, from TechDirt's own "who can you trust if you can't trust the phone company department," Karl Bode found that a study by the AT&T-funded Progressive Policy Institute concluded that if Title II regulations were passed, the nation would be "awash in $15 billion in various new Federal and State taxes and fees. Bode writes that the study cherry-picked and conflated data:

Layton Resident Breaks Down the Numbers on UTOPIA Service: Letter to the Editor

Thane Packer, a Layton resident, attended a community meeting this fall to learn what he could about UTOPIA. Packer is like many others who consider his costs for Internet, TV, and phone as an important factor in whether or not to support UTOPIA. After attending the meeting, he considered the presentation and what he described as "some very heated, and some very biased opinions."

He then examined his existing triple play costs and shared his findings in a letter to the Standard Examiner. The rest of his letter is reproduced below (emphasis ours):

The total bundled bill for home phone, Internet, and a TV package was $273.63. That is $93.25 per month for the internet and home phone plus $180 for TV. The telephone service is fine but the Internet is frustrating. The signal fluctuates, is spotty and unreliable.

In Provo, because there is competition from a fiber optic network, this exact same package, which includes, total Internet, home phone and the TV package is available from a provider for only $99.94 a month.

This means that even if I didn’t use a fiber network like the one in Provo the competition price from the provider would save me $178.69 a month. That means that without the competition from a fiber system like UTOPIA, the provider stands to make, (from me) a total of $2,144.28 a year and in 25 years (the pay-off time for the current bond, for which we receive nothing) is over $53,000

If I were able to switch to fiber system here in Layton a much better service would cost even less and I can certainly find a better place to use my $53,000.

So ask yourself this question. What is your current service costing you, how much extra are you paying, and what are you getting for it? For me the advantage of saving at least $178.69 a month and getting better service for it is obvious.

So please Layton, find a way to make this or something like it work for us. A very vocal minority should not be able deprive the rest of us from better cheaper service.

Utopia at a Crossroads: Part 3

This is the final installment of a three part series, in which we examine the current state of the UTOPIA network, how it got there, and the choices it faces going forward. Part I can be read here and Part II here

In Part I of this story, we laid out the difficult situation the open access UTOPIA network finds itself in and how it got there. Part II gave the broad outlines of Macquarie’s preliminary proposal for a public-private partnership to complete and operate the network. The numbers we deal with here are mostly from the Milestone One report, and assumed the participation of all 11 cities. It should be noted that since five of eleven UTOPIA cities opted out of proceeding to Milestone Two negotiations, the scope and scale of the project is subject to change. The basic structure of the potential deal is mostly set, however, allowing us to draw some reasonable conclusions about whether or not this deal is good for the citizens of the UTOPIA cities.

Let’s first turn to why Macquarie wants to make this investment.  This would be the firm’s first large scale broadband network investment in the U.S., allowing it to get a foothold in a massive market that has a relatively underdeveloped fiber infrastructure. To offset network build and operation costs, it will also be guaranteed the revenue from the monthly utility fee, which my very rough calculations put between $18 and $20 million for the six cities opting in to Milestone Two (or between $30 and $33 million per year for all 11 cities) depending on whether the final fee ends up closer to $18 or $20 per month.

Media Roundup: Blackburn Amendment Lights Up Newswires

Rep Marsha Blackburn (R-TN) and her love for large corporate ISPs was all over the telecommunications media this week. She attempted to kneecap the FCC as it explores options to restore local telecommunications authority to communities. Blackburn introduced an amendment attacking local options as the House took up general appropriations bill H.R. 5016.

The amendment passed 223-200, primarily along party lines, with most Republican Reps voting with Blackburn and all but two Democrats opposing the amendment.

Democrats voting to support the amendment included Georgia's 12th District's John Barrow and Jim Matheson from Utah's 4th District. If either of these gentlemen represent you, take a moment to call their offices and point out their voting mistake.

Republicans that voted No were Mike Rogers and Mo Brooks from Alabama's 3rd and 5th Districts. Charles Boustany from the 3rd District in Louisiana and Chuck Fleischmann from the 3rd District in Tennessee (includes Chattanooga) also opposed the restriction. If these elected officials represent you, please take a moment to contact them and thank them for breaking ranks to support local authority.

Coverage this week was fast and furious.

Sam Gustin from Motherboard reported on Blackburn's efforts. Gustin checked in with Chris:

"Blackburn's positions line up very well with the cable and telephone companies that give a lot of money to her campaigns," said Mitchell. "In this case, Blackburn is doing what it takes to benefit the cable and telephone companies rather than the United States, which needs more choices, faster speeds, and lower prices."

Utopia at a Crossroads: Part 2

This is the second of a three part series, in which we examine the current state of the UTOPIA network, how it got there, and the choices it faces going forward. Part I can be read here and Part III here.

With the status quo untenable, no easy exit strategy, and political opposition mounting, UTOPIA appeared besieged in early 2013. Then along came Macquarie, which started studying the network and putting together a proposal for a partnership. The full Milestone 1 report from Macquarie is here,  but in case you aren’t prepared to read 100 pages the broad outlines are as follows:

UTOPIA at a Crossroads: Part 1

This is the first of a three part series, in which we examine the current state of the UTOPIA network, how it got there, and the choices it faces going forward.

At the end of a month of public meetings, hearings, and city council votes, just over half of the cities that make up UTOPIA have chosen to take the next step in their negotiations with the Macquarie Group. The massive Australian investment bank has put forward an offer to become a partner in the troubled network in exchange for a $300 million capital infusion to finish the long-stalled FTTH buildout.

Of the 11 member cities that have debt obligations for the network, six (comprising about 60% of all 163,000 addresses in the UTOPIA area) have voted to proceed to “Milestone 2,” which means digging into details and starting serious negotiations on the terms of a potential public-private partnership. Macquarie outlined their opening proposal in their Milestone 1 report in April.

Macquarie has about $145 billion in assets globally, and is no stranger to large scale infrastructure projects. Their Infrastructure and Real Assets division has stakes in Mexican real estate, Taiwanese broadband networks, Kenyan wind power, and a New Jersey toll bridge, to name just a few. For their UTOPIA investment, they would be working with Alcatel Lucent and Fujitsu, highly capable international IT companies. So there’s some serious corporate firepower across the negotiating table from the UTOPIA cities - and in this case, that’s not actually a bad thing.

FreeUTOPIA Destroying Myths About Macquerie in Utah

Jesse Harris at FreeUTOPIA recently published a piece correcting the many fantastic errors disseminated by the Utah Taxpayers Association. The group continues to spread lies to poison a proposal from Australian company Macquarie that could reinvigorate the ailing network. We spoke with Harris and Pete Ashdown, from Xmission, about the proposal in episode #85 of the Community Broadband Bits podcast.

As can be expected, the arguments are nothing new, but the Utah Taxpayers Association still finds a way to take it to new extremes. Harris' post is worth the read because it offers truths to correct misinformation.

After correcting several points, Harris writes:

Really, their diatribe just goes on and on like that. A lot of it is basic fact-checking stuff that’s flat-out wrong, but they know those kinds of statements will rile people up and get them too angry to consider the real facts.

The best thing you can do right now is to make sure you show up at city council meetings, let your elected officials know you support the deal, and make sure you counter any of the flat-out false talking points the opposition will be trotting out time and time again. We’re really close to having this thing in the bag, and we can’t let up until the ink dries on the final agreement.

In a late-breaking story, he also says he has evidence that CenturyLink is behind this astroturf campaign. Not at surprising, but we should not sit idly by while powerful corporations try to undermine our republic.

Resort Town In Utah Seeks Partner to Expand Economic Base with FTTH

Park City wants to be one of the first resort communities to employ an FTTH gigabit network. Currently, over 22 million visitors come to the northern ski town each year bringing approximately $500 million in tourist spending. The community of 7,600 permanent residents seeks to diversify its economic base. According to a recent Park City News article, community leaders see broadband as an essential tool. 

Utah, one of the states that impose barriers to community networks, imposes de facto wholesale-only requirements on municipal networks. Park City's April Request for Proposals [PDF] clearly states that they seek a private partner to own, operate, and manage a network across the city. Proposals are due May 16.

Park City has smaller segments of fiber in place now for internal operations. The company securing the project will have access to that fiber for the network. The City also plans to allow access to existing conduit, rights-of-way, and city-owned poles as part of the new network. Park City does not operate its own electric utility.

Four years ago, Park City competed to attract Google Fiber, which eventually went to Kansas City. In the spring of 2013, city leaders developed a broadband roadmap. At the time, community leaders began contemplating the economic development benefits associated with better connectivity. From a May 2013 Park City News article:

Leaders want to create a diversified economy stretching beyond the sectors tied to the resort industry. Doing so, they say, would make the economy less susceptible to warm, dry winters that do not attract skiers in large numbers.

Technology upgrades, they say, are important as officials attempt to attract new businesses to Park City not tied to the resort industry.