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Readers know we have offered extensive coverage of the publicly owned network in Longmont, Colorado. The utility will soon offer telecommunications services to businesses and residents that are physically located within 500 feet or less of its existing network. At this stage, policies and procedures for the service are being finalized by Longmont Power and Communications (LPC).
We talked with Vince Jordan, LPC's Telecom Manager, who told us the expansion is part of their original business plan. Local establishments are ready to sign up with LPC. Twenty businesses put themselves in the queue within the past month. In addition to industrial and manufacturing companies, healthcare clinics, service industries, and entrepreneurs are waiting to get hooked up. Vince tells us several companies are looking to build data centers now that they will be able to get the bandwidth they need from LPC.
Vince credits LPC's ability to offer great local customer service as another driving factor for the early sign-ups. LPC is developing a fiber hood campaign to determine the locations for the first set of FTTH connections. The campaign, similar to that used by other communities and more recently by Google, will look at residential areas that are located near existing fiber and conduit. Surveys and early sign ups will identify seven fiber hoods.
Longmont's ordinance [PDF] requires customers to cover the cost of running fiber to their homes or businesses. Even though connecting can be pricey, Vince tells us potential customers call him regularly asking when they will be able to get fiber to their homes or establishments.
Many residential inquiries involve home based businesses, but not all. He relays the story of one retired gentleman who is so fed up with sorry service from the incumbents, he is willing to pay anything up to $10,000 to get LPC fiber to his home. We have encountered many instances of crappy customer service from the big boys, leaving us to suspect others share that sentiment.
Kudos to Richard Downey, Village Administrator for the Village of Kronenwetter in Wisconsin. Mr. Downey reminded us that we have yet to write about the fiber network in Princeton, Illinois. While we have noted Princeton in our list of economic development successes, we haven't delved into the network that serves the city, the schools, and the business community.
Princeton is home to about 7,500 people and is located in the north central region of the state in Bureau County. They have their own electric, water, and wastewater utilities and began offering broadband connectivity in late 2003. We spoke with Jason Bird, Superintendent of Princeton Electric Department, who shared the network's story with us.
In 2003, the city’s largest electric and water consumer was also the largest employer. At the time, incumbents served the community with T1 connections. The manufacturing company moved to Mexico, taking 450 jobs with it. The community was stunned.
Approximately 6 months later, Ingersoll Rand, the community's second largest employer with about 300 jobs, also considered moving away from Princeton. While lack of needed broadband was not the only reason, the Ingersoll Rand CEO let community leaders know that it was one of the influential factors. The company liked being in Princeton, and the city would have been on the top of the location list if not for the sad state of connectivity. At the time, the only commercial option was unreliable T1 connections for $1,500 - $2,000 per month. If Ingersoll Rand moved, the community would experience job losses equal to 10% of the population. Community leaders needed to act and do it quickly.
To retain Ingersoll Rand, the City Council decided unanimously to go into the telecommunications industry. They issued an RFP and encouraged incumbents AT&T and Comcast to bid; neither were interested. (Interestingly, once Princeton let it be known that they were going to build the network without them, there were some local upgrades from both companies.)
We have covered developments in the town of Indianola, Iowa, where the community decided to build their own network in 1998. The original purpose for investment was to use the network to enhance public safety and increase efficiency with SCADA applications. In 2005, however, the network began offering telecommunications services to local businesses. As of October, Indianola Municipal Utilities (IMU) began offering fiber-to-the-home to residents as it gradually begins expanding the use of its fiber asset.
You can now hear firsthand about the network, its history, and how the municipal utility navigated the journey to its next-generation open access network. Craig Settles interviewed Todd Kielkopf, General Manager of IMU, in an August Gigabit Nation podcast. The two discuss IMU's evolution since 1998. They also talked about the unique advantages that exist when a community considering network infrastructure investment already has a municipal utility in place.
Kielkopf tells how the driving factor for the fiber installation was to allow easier management and communication between utilities. When a 1990 franchise agreement with MediaCom was about to expire, the city investigated options. Hopes were that that the city could build a fiber network and MediaCom would offer services over that network, but that vision was never embraced by MediaCom.
Iowa law allowed the city to hold a referendum asking residents for permission to provide telecommunications services through the municipal utility's network. The referendum passed and they created a five year financial plan. Financing was with taxable and tax exempt bonds. The electric utility would build and own the network and a new telecommunications utility would license to a private partner that would offer retail services. Now, IMU and Mahaska Communication Group (MCG) have an agreement whereby MCG provides retail services over the network. While the agreement is not exclusive, no other providers currently use the network.
We are engaged in a rare event - we are moving offices. The Institute for Local Self-Reliance pre-dates our initiative and has been in this location for over 20 years. During the packing and sorting, we have encountered a curious collection of treasures.
In keeping with this air of nostalgia, we want to present a report from 2001 by John Kelly, who was Director of Economics and Research at the American Public Power Association at the time he wrote the piece. The title caught our attention but the content kept our interest. We want to pass it on as recommended reading.
"Old Snake Oil in New Bottles: Ideological Attacks on Local Public Enterprises in the Telecommunications Industry" (PDF format) is a critique of a Progress and Freedom Foundation (PFF) report titled "Does Government belong in the Telecommunications Business?" (PDF) Kelly confirms that the arguments and fallacies advanced by the private telecommunications industry and its lobbyists have not changed in 11 years. The past 11 years have also seen the same slanted arguments and the same shaded research that, even after repeatedly being discredited, arise again and again.
The arguments truly are "snake oil." From the report:
One dictionary definition of "snake oil" describes it as "a liquid substance with no real medicinal value sold as a cure-all or nostrum...." This definition aptly describes the content of the PFF report. Its claims are not solid ones and can be easily refuted. Essentially, it views the elimination of government enterprises from the telecommunications industry as a cure-all, or nearly one, for the competitive problems that exist in the industry. This solution has no real value, and is counterproductive; it would exacerbate the problem of a lack of effective competition in the industry. The problem is a lack of effective competition, not public enterprises.
The Chattanooga Gig continues to benefit the community. We have covered some of the jobs that it has created, how it has lowered City expenditures and improved street lighting, and the recently announced speed increase without hiking rates. Now, EPB can also boast about how the network has significantly cut power costs.
Dave Flessner from the TimesFreePress.com reports that, thanks to fiber enabled smart grid technology, Chattanooga's electricity rates are 5 percent less than they would be without the network. From the article:
“The savings from the smart grid and the payments from the telecom division to our electric system are exceeding our costs and that is helping save money for every customer of EPB, whether you are signed up for any of our telecom services or not,” [EPB President Harold] DePriest told EPB directors Friday. “If we hadn’t made this investment, your electric bills would be higher.”
In addition to savings for every electric consumer, the network has been wildly successful for its video, phone, and Internet offerings. There are 40,000 users to EPB and its telecom division generates more profit than its 73-year old electricity utility. Chattanooga is ahead of the game:
EPB Chairman Joe Ferguson said the [American Reinvestment and Recvery Act] stimulus funds helped speed the installation of the smart grid network from the original plan of 10 years down to less than two years.
“We’re exceeding the goals we set in our business plan,” Ferguson said. “We’ve stayed ahead of schedule; we’ve stayed on budget, and the number of customers who have signed up is better than we expected. The acceptance has been huge and that’s where the revenue comes from that we can plow back into our business and help keep our electric rates down.”