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New Rural Gig From SMBS In Minnesota

May 9, 2017

Southwest Minnesota Broadband Services (SMBS) is now rolling out gigabit connectivity to local communities. Local leaders and network officials anticipate the upgrade will attract more jobs and more people to this rural area of the state:

"Jackson is very fortunate. This is something that a lot of people probably take for granted and don't realize how lucky we are in greater Minnesota to have high capacity access," said Jackson City Administrator Jennifer Bromeland.

"It's just been so vitally important, and to be able to offer that in the communities of our size is just something else. It's absolutely fabulous," SMBS General Manager Travis Thies said.

Regional Effort

SMBS received $12.8 million in American Recovery and Reinvestment Act (ARRA) funding to add to their own contributions, for the 181-mile fiber project in 2012. The publicly owned regional network serves the communities of Jackson, Bingham Lake, Heron Lake, Lakefield, Brewster, Wilder, Okabena, and Round Lake. Several of the communities in the consortium had been told by incumbent CenturyTel (now CenturyLink) they would never get upgrades faster than dial-up because the towns were just too small to justify investment from a national provider. Now all the communities collectively own the high-speed fiber-optic network. 

Local businesses strongly supported the project and helped secure the ARRA funding with letters to the federal government expressing the need for better connectivity in the region. Municipal facilities were connected to the Internet via 1.5 Mbps connections that drained bandwidth for the rest of the community. Local healthcare facilities and nonprofits also stepped up to submit appeals to the federal government. Clearly, the entire region - and all sectors in it - needed better connectivity.

Things have changed since the communities took matters into their own hands.

"We have the fiber set up to many of our businesses and residents right now, so we have had this for a while and it's helping or businesses to meet their goals and just helping us to keep people in Jackson and attract people to want to move to Jackson," said Bromeland.

Better Broadband On The Prairie

In addition to bringing high-quality Fiber-to-the-Home (FTTH) access to people who used to depend on slow DSL, satellite, or dial-up, SMBS has helped improve mobile wireless in the region. Back in 2013, Christopher interviewed Windomnet’s Dan Olsen for episode 64 of the Community Broadband Bits podcast, who described how both networks have brought jobs and other benefits to the region. You can also learn more from our 2014 report All Hands on Deck: Minnesota Local Government Models for Expanding Fiber Internet Access.

Tags: southwest minnesota broadband servicesminnesotaruralgigabitregionalFTTHstimulusupgrade

Community Broadband Media Roundup - May 8

May 8, 2017


Bill seek to restrict Maine towns' efforts to build high-speed Internet networks by Colin Woodard, Portland Press Herald

Christopher Mitchell, director of community broadband networks at the Institute for Local Self-Reliance in Minneapolis, said the Maine bill and others like it across the country are designed to stifle competition. “The very large providers recognize that they compete not on service, but on being the only game in town,” he said.

New Maine law would restrict community broadband networks by Karl Bode, DSL Reports

Bill will not stop Maine towns from building high speed Internet by Colin Woodard, Portland Press Herald

The bill would have imposed numerous restrictions on municipalities that wanted to invest in their own network or to form a public-private partnership to build one they can lease. These include mandatory feasibility studies and public referendum provisions, prohibitions on using municipal funds, restrictions on using funds through a bond issue or setting rates, and the removal of anti-trust liability protections for town’s that offer broadband.

While ALEC claims to be a nonpartisan professional association for state legislators, critics say it is really a corporate-funded conduit allowing businesses to write legislation for compliant lawmakers. Virtually all of its funding comes from its corporate members, and its telecoms committee – which created the organization’s anti-municipal broadband bill – has counted many of the major cable and telephone companies as members, including Time Warner Cable, Comcast, Verizon, AT&T, and Cox. A vice president of their industry association, Rick Cimerman, is the committee’s current corporate chair.

Plan to kill municipal broadband fails in state legislature by Jon Brodkin, ArsTechnica

Maine the latest state to try and let giant broadband providers write shitty, protectionist state law by Karl Bode, TechDirt



Internet privacy measure removed as lawmakers debate budget by Erin Golden, Minneapolis Star Tribune



Net neutrality is crucial for equal Internet access, small business growth by Heather Murren, The Nevada Independent


New Mexico

Communities can cooperate to get high-speed Internet service in rural areas by Mark Buell, Albuquerque Journal



Electronic Power Board of Chattanooga surpasses 90,000 fiber customers by Dave Flessner, Chattanooga Times Free Press (Government Technology)



The last mile: Broadband extension critical to region by Bluefield Daily Telegraph

When will broadband make it to Northern Neck, rural Virginia? by Pamela A. D'Angelo, Fredericksburg Free Lance Star

'Dig once' to install broadband and water by Tom Chillemi, Southside Sentinel




Verizon and AT&T both launched misleading services this week - and it points to a larger problem by Jeff Dunn, Business Insider - Markets

It's time for co-ops to stand up and embrace broadband by Craig Settles, Broadband Breakfast

In the battle to deploy broadband, cooperatives (co-ops) can be a decisive force to cover the rural flanks in states with aggressive broadband adoption goals such as California, New York, and Minnesota. In the more rural states, or ones without stated commitments to broadband, co-ops may have to carry the lion’s share of responsibility if their rural communities are to have a hope for broadband.

Image of the Highlander bull courtesy of FrankWinkler via pixaby.

Tags: media roundup

Data Collection: New Local Rule Helps Protect Seattle Citizens

May 8, 2017

Seattle is the latest local government taking steps to protect citizens’ data. As of May 24th, companies with franchise agreements allowing them to operate in the city must obtain customer permission to sell personal data or browsing histories.

The three companies operating in Seattle are Comcast, CenturyLink and Wave Broadband.

Opting In vs. Opting Out

In Seattle, the rule will require customers to opt-in to allow companies to collect and sell their data, unlike the usual situation - opting out to refrain. 

“We felt that an opt-out process was insufficient,” said Michael Mattmiller, the city’s chief technology officer. “Consumers are too busy to somehow learn through the fine print that your web usage is being mined or sold.”

To remain in compliance with the new rule, companies must submit semi-annual reports. 

State Efforts Uncertain

The state is still considering passing a similar bill but Seattle isn’t waiting for Olympia to act first. Minnesota’s privacy protection amendment was removed from the omnibus jobs bill in conference committee and faces an uncertain future; acting at the municipal level appears to be most likely to stick.

Tacoma's City Council passed a resolution in April to heighten personal data privacy on the publicly owned Click! network.

Read Seattle's new rule for Internet service providers here.

2017 Seattle Privacy Rule For Service ProvidersTags: seattlewashingtonprivacydatalocalstate laws

U.S. Businesses Want Fiber More Than Ever

May 6, 2017

In 2004, about 90 percent of multi-tenant company-owned buildings were not connected to fiber for connectivity. In April, Vertical Systems Group revealed that in 2016 that number had dropped to 50.4 percent. The results underscore the fact that businesses understand the importance of fiber as a basic commercial amenity and strive to obtain it in their own facilities.

“Fiber footprints have been highly valued assets in nearly every merger transaction in the industry during the past two years. The density of fiber lit buildings on-net and geographic reach are significant competitive differentiators,” said Rosemary Cochran, principal at Vertical Systems Group. “For 2017, network providers report that fiber footprint expansion is the top factor that will drive Carrier Ethernet growth and support rising demand for other gigabit-speed services.”

In addition to data transport and online commerce, companies need high capacity and reliable connectivity to share files with potential partners. Depending on the type of work they do, transactions may depend on split second data delivery, which only fiber can provide.

As an increasing number of communities consider investing in fiber-optic networks, economic development is often cited is their first consideration. Without fast, affordable, reliable connectivity readily available, companies looking to relocate will move on and take jobs with them.


Tags: business servicesdataresearchreal estateeconomic development

Sun Prairie To TDS Sale; Details Matter

May 5, 2017

Earlier this spring, Sun Prairie Utilities (SPU) and TDS Telecommunications Corp. signed a letter of intent to transfer ownership of the community’s Fiber-to-the-Home (FTTH) network to TDS. After weighing the pros and cons, the City Council approved the deal by a 4 - 2 vote at an April 11th meeting.

Conversation and Reservations

TDS will pay $2.88 million for the fiber-optic network. The asset has been valued at $2.7 - $2.8 million and the city owes $2.85 million on the network.

The company has agreed to expand the network over the next 30 months and will use customer demand to determine where to deploy new investment. If they don’t begin expansion within 30 months, TDS will pay a $25 per unit penalty to the city.

At least one Alderman felt the penalty was too lenient. “I want this contract to have real consequences if the buildout doesn’t happen like they say it will,” said Mike Jacobs at the April 11th meeting. Jacobs expressed his desire to allow SPU to continue efforts to develop the network, arguing that high-speed Internet access is an essential service like police, fire, and other services the city typically provides. He argued such an asset should not be sold to a company that needs to make profits.

Alder Maureen Crombie also wanted to hold off on approving the transaction. She stated that the Council should wait three weeks to hear residents concerns but other council members disagreed.

Incumbent Charter Communications also opposed the sale, stating that they face unfair competition now because the city will be helping TDS market the FTTH service. Alders responded to Charter’s government affairs manager by reminding him that Sun Prairie had approached the company asking for upgrades but were ignored. They also said that, had Charter offered to purchase the system, Sun Prairie officials would have considered their offer.

Important Details

Under the agreement, reported the city’s attorney, the city will share revenue with TDS based on penetration rates. As long as subscribership is 25 percent or higher within certain areas, revenue sharing can be up to 7.5 percent. Revenue sharing will occur for the first five years after the transfer of assets. The Asset Purchase Agreement is available online as part of the City Council meeting packet.

TDS says it will continue to offer symmetrical service without data caps, two concerns voiced by current SPU subscribers. The agreement also stipulates that, if an average cost per unit exceeds $2,000 per unit to connect, TDS is not obligated to serve that area of the city. Unfortunately, this approach will allow TDS to serve the most densely populated areas and will not solve the problem of connecting hard to serve neighborhoods.

Sun Prairie developed a FTTH pilot last year and more than 50 percent of households in the service area had requested connections. It was an indication that citywide FTTH would also do well, but community leaders are not comfortable with the $25 million estimate for citywide deployment. 

The City Council considers their decision to sell the community asset to TDS as less risky than investing in publicly owned fiber, but they’re really just trading one type of risk for another. TDS can escape its promise to serve the entire community. Sun Prairie has a right of first refusal if TDS decides to sell, but only if the sale would reduce the number of competitors in the community. The right of first refusal only applies to assets from the SPU system; if TDS sells all of its Wisconsin assets, the right of first refusal won’t apply.

Tags: sun prairiewisconsinprivatizationtdsFTTHpilot project

Eastern Shore of Virginia Broadband Authority Expands Wireless And FTTH Coverage

May 4, 2017

Eastern Shore of Virginia Broadband Authority (ESVBA) has expanded its fixed wireless coverage area to include the community of Bloxom. The organization has also approved plans to expand its Fiber-to-the-Home (FTTH) deployment beyond the test project town of Harborton.

Towering Above The Shore

ESVBA opened its Bloxom Tower last fall so residents and businesses in the rural community of about 380 people. The tower enables better connectivity in the underserved town and provides better cellular coverage. ESVBA is also providing a free wireless hotspot near the tower.

In order to stimulate competition and provide choice to potential subscribers, ESVBA’s Broadband Initiative Program will provide free Internet access and transport for up to 12 months for wireless ISPs.

In a press release, Chris Kreisl, of the Bloxom Town Council said:

“We knew how important it was for us to have this kind of infrastructure. Without it, we were being left behind as the information economy continued to push citizens around the globe online. Now, Bloxom businesses have the opportunity to compete on equal footing.”



We introduced readers to the not for profit ESVBA in February. The open access middle mile network began in 2008 with funding from Accomack and Northampton Counties. The organization has obtained about $8 million dollars for deployment and expansions, some from NASA and the National Oceanographic and Atmospheric Administration, which use the infrastructure. ESVBA returned Accomack and Northampton counties’ investments when the network became sustainable.

More Fiber

In March, the ESVBA decided to move forward and expand the FTTH project that we wrote about in February. The expansion will bring high-quality connectivity to houses along residences situated on the ESVBA network’s existing fiber route in five rural areas. Check out expansion areas one and two.

Tags: esvbavirginiaruralfixed wirelessFTTHexpansioneconomic development

Committee Nixes LD 1516 in Maine

May 3, 2017

Today in the Maine Legislature, the Committee on Energy, Utilities and Technology voted unanimously to stop LD 1516, a bill that would restrict local telecommunications authority. After Tuesday's compelling testimony, when it was time for a Wednesday vote, LD 1516’s sponsor moved the bill be shelved.

Engaging Testimony

On Tuesday, May 2nd, the Committee of Senators and Representatives met to listen to testimony on the bill. We’ve provided audio of the public hearing.

South Portland, Islesboro, the Sanford Regional Economic Growth Council, and Rockport all sent experts with knowledge about developing public projects to testify in opposition to the bill. Representatives from GWI (the ISP working with several local communities that have invested in their own Internet infrastructure), the Maine Municipal Association, and the Mayors’ Coalition also testified against LD 1516.

Communities where publicly owned fiber is already improving local connectivity provided stories of how they tried unsuccessfully to work with incumbents. Page Classon from Islesboro described how incumbent proposals could be described as, “You pay for it, we own it, we charge you what we charge everyone else.” LD 1516 requires local referendums for such investments and Classon balked at taking such a proposal to the voters.

In South Portland, the city paid for construction of its open access fiber-optic network with general fund reserves. The language in LD 1516 restricts communities to funding through revenue bonds but South Portland uses its network to offer free Wi-Fi and to improve connectivity for municipal facilities. Under LD 1516, they would not have been able to make the investment.

Rick Bates from Rockport testified that the bill would force municipalities to contend with restrictions that legacy providers will never face and how those restrictions will not solve the problem of connecting rural Maine. Bates also took the opportunity to point out that organizations such as the Taxpayer Protection Alliance relies on misinformation and incorrect data, such as their erroneous assertion that Rockport has debt for its FTTH project.

Common themes from each testifying community and the other organizations that opposed the bill were that the bill was “heavy handed” and that it contradicted the state’s strong home rule authority. The proposals in the bill were described as a “regulatory maze” and attempts by out-of-state incumbents to limit competition. Testifiers all pressed the idea that many of the mandates in the bill were matters of common sense and that local communities need the authority to work through the steps at their own pace because each community is unique.

Local Authority?

In an interesting twist, proponents of the bill tried to assert that they supported the bill as a way to preserve local authority. A representative from the Maine Heritage Policy Center, a group with ties to ALEC, tried to describe LD 1516 as a “best practice bill.” Senators and Representatives didn’t seem convinced by proponents' weird logic at the public hearing. They seemed more interested in learning about ways local communities had tackled the problem of poor connectivity.

Seeing The Light

When lawmakers came back on Wednesday, May 3rd for the work session, sponsor Rep. Nathan Wadsworth moved the bill “ought not to pass.” He stated that, since communities were already engaging in feasibility studies as required by the bill and voluntarily taking many of the actions prescribed by LD 1516’s language, the bill was “premature.” With no discussion, the committee passed his motion.

Tags: me ld 1516mainelegislationlocalrockport mesanford meislesboro mesouth portland mecompetitionpartnershipruralaudio

ECFiber Connecting Rural Vermonters To The Speed They Need - Community Broadband Bits Podcast 251

May 3, 2017

We’ve been covering the East-Central Vermont Community Fiber-Optic Network (ECFiber) since 2009; it has come a long way from inception. ECFiber is a group of rural Vermont towns that are working together to deploy a regional network to offer high-quality Internet access to communities typically stuck with slow, unreliable connections such as DSL and dial-up. In this episode, Christopher talks with Carole Monroe, CEO of ValleyNet, and Irv Thomae, District Chairmen of ECFiber’s Governing Board. The not-for-profit ValleyNet operates the ECFiber network.

The organization has faced ups and downs and always seemed to overcome challenges. It began with funding from individual local investors who recognized the need to bring Fiber-to-the-Home (FTTH) to the region. Now, the organization is characterized as a “communications union district,” which creates greater funding flexibility and stability.

In this interview, Carole and Irv talk about the new designation and the plans for bringing the network to the communities that are clamoring for better Internet access. They also get into recent developments surrounding overbuilding by DSL provider FairPoint, a project funded by CAF II subsidies. We hear how ECFiber is bringing better connectivity to local schools and helping save public dollars at the same time and we find out more about the ways Vermonters in the eastern rural communities are using their publicly owned network.

Read the transcript of the show here.

We want your feedback and suggestions for the show-please e-mail us or leave a comment below.

This show is 29 minutes long and can be played on this page or via iTunes or the tool of your choice using this feed.

You can download this mp3 file directly from here. Listen to other episodes here or view all episodes in our index.

Thanks to Arne Huseby for the music. The song is Warm Duck Shuffle and is licensed under a Creative Commons Attribution (3.0) license.

Tags: audiopodcastbroadband bitsVermontecfiberfairpointFTTHruralcompetitionsubsidiesfccpolicyconnect america fundnew englandnonprofitdslcable

Three Texas Entities Partner For Connectivity, Savings

May 3, 2017

The Grapevine-Colleyville Independent School District (GCSID) will lower their telecommunications costs and improve Internet service through an agreement with the City of Colleyville to build Internet infrastructure to K-12 schools. The City of Grapevine will serve as the construction contractor for the project.

High Cost Of Incumbent Services

GCISD leased lines from AT&T for $200,000 per year in order to obtain 1 gigabit connectivity. When they needed upgrades for the school district's Wide Area Network (WAN) at the two high schools and the main Network Operations Center (NOC), prices increased. After the upgrades, GCISD’s annual costs went up to $300,000 and school officials expected prices to continue to rise. When GCSID needed to increase the capacity of their WAN and NOC circuits, estimates for the upgrade came in at $1.85 million per year.

Rather than continue to pay such high costs, GCSID has entered into an interlocal agreement with Grapevine and Colleyville to jointly construct the network. The new solution will offer them a minimum 10 gigabit capacity for lower long term costs.

GCISD Executive Director of Technology Lane Hunnicutt said:

“By partnering with the City, the district is able to save more than 50 percent on installation of the new fiber optic cables. Additionally, since the City is enabling the district to own our own fiber, we will no longer be reliant on a third-party provider for monthly service and maintenance."

Network Logistics

The $5 million network will stretch over 57 miles and is financially supported by the City of Grapevine, the City of Colleyville, and GCISD. The project will be completed within five years and the school district expects a return on its $3 million investment in three to five years. Grapevine and GCISD has dedicated Tax Incremental Financing (TIF) dollars to the project, and each party is responsible for financing infrastructure on their property. Grapevine's role as contractor reduces the cost of the project significantly.

About Institutional Networks

Institutional networks can connect government owned facilities like city hall, schools, and other community anchor institutions. Institutional networks result in cost savings for school districts in Storm Lake, IA ($76,000 per year saved); Greeneville, TN ($50,000 per year), and Missoula, MT ($150,000 per year). Communities have used institutional networks as a backbone from which to expand a network footprint to provide low-cost, high-quality Internet access to local businesses and residents, such as the city of Hamilton, Ohio.

Construction on the network began in January 2016, and will be completed in several phases. In addition to the school district, the City of Colleyville is considering connecting other city-owned facilities to the institutional network. 

Tags: texaspartnershiptax increment financingschool districtschooleducationpublic savings

Roanoke Valley Broadband Authority Connecting New Accelerator Program

May 2, 2017

The Roanoke Broadband Valley Authority (RVBA) was busy early this legislative session helping to fight off a bill in the Virginia Legislature aimed at limiting local authority. Now that the bill has been all but neutralized by grassroots efforts, RVBA can dedicate 100 percent of its time to improving connectivity and economic development in Virginia’s Roanoke Valley.

Accelerating, Mentoring, Connecting

The RVBA just announced that its network is providing fast, affordable, reliable dark fiber services to a regional business accelerator in downtown Roanoke. The Regional Acceleration and Mentoring Program (RAMP) is a collaboration between the city of Roanoke, Virginia Western Community College (VWCC), and the Roanoke-Blacksburg Technology Council. In a press release, Shivaji Samanta, Director of Information and Educational Technologies at Virginia Western said:

“Virginia Western has collaborated with the Roanoke Valley Broadband Authority to provision fiber connectivity between its main campus and the two downtown Roanoke sites at the Claude Moore Education Center and the new entrepreneur training facilities inside the RAMP building. The project, delivered on time and within budget, provides VWCC with dedicated connectivity to its off-campus locations at speeds limited only by the equipment at the end-points for a fixed monthly cost.”

RAMP is located in an historic building that was once the Gill Memorial Hospital; the city used a $600,000 state grant to renovate the building and transform it into an incubator. VWCC will be offering business education courses at the facility and will offer faculty support, and the Roanoke-Blacksburg Technology Council will develop mentorship and networking opportunities. Members of the Council also lead the RAMP Advisory Board.

Connecting the Business Community

This is the latest in what is sure to be more connections offered by the RVBA. Last fall, finance company, Meridium, signed up with the publicly owned network. The company needed dark fiber for Internet access and data transport for its downtown headquarters.

According to RVBA President and CEO Frank Smith:

“Dark Fiber is advantageous to growing businesses that wish to secure and invest up-front in future bandwidth capacity. As we remain committed to the economic development and technological growth of the Roanoke Valley, this partnership with RAMP makes perfect sense. We share a core commitment to maximizing the future growth potential and technological infrastructure of our region.”

Check out our interview with Frank for episode 221 of the Community Broadband Bits podcast.

Tags: roanoke valleyvirginiadark fiberincubatorsmall business

Transcript: Community Broadband Bits Episode 250

May 1, 2017

This is the transcript for episode 250 of the Community Broadband Bits podcast. Gary Reback, author of Free the Market: Why Only Government Can Keep the Marketplace Competitive, joins the show to discuss antitrust law. Listen to this episode here.

Christopher Mitchell: I think we have some consensus that maybe the lack of antitrust enforcement has been going on too long and we're beginning to have some problems that need to be addressed.

Lisa Gonzalez: This is episode 250 of the Community Broadband Bits Podcast. From the Institute for Local Self-Reliance, I'm Lisa Gonzalez. In this week's episode, Christoper talks with Gary Reback, attorney and author. Gary's been called the protector of the marketplace and the antitrust champion for his work representing some of Silicon Valley's best-known companies. Gary and Christopher talk about antitrust, concentration of power and the different ways shifts in antitrust enforcement negatively impact both consumers and the market as a whole. Let's get to it.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits Podcast. I'm Chris Mitchell. Today, I'm speaking with Gary Reback, a well-known Silicon Valley lawyer. Welcome to the show, Gary.

Gary Reback: Thank you.

Christopher Mitchell: I'm excited to have you on the show. You're well-known for being very involved in getting the government to sue Microsoft and for writing a book that actually came to me at a really good time about seven years ago called Free

the Market!: Why Only Government Can Keep the Marketplace Competitive. I really enjoyed that book, highly recommend it. For our audience's sake, we're not going to talk much about broadband in this conversation. But I think that many of these principles around competition in markets apply very strongly but it's something that will be sort of in the sideline. Gary, I'm curious if we can just start with a brief description of what you might describe as a working market before we spend the rest of our time talking about the markets that aren't working as well.

Gary Reback: So that's an important question and an important point, Chris. We live in a capitalist system and the whole theory of a capitalist system is that when markets are functioning properly, everybody's better off, not just a few people but everybody's better off and resources are allocated correctly and people will get what they want at the best available prices and so forth. So in a well functioning market, you have a bunch of buyers and they're all competing against each other. You have a bunch of sellers and the sellers are all competing against each other. Then you kind of have an interface between the two groups where transactions occur and the competition among the buyers and the competition among the sellers enables exactly the most efficient transactions to occur across that interface and that what makes a market very, very productive.

Christopher Mitchell: Well, with that in mind, I'm curious if you could just rattle off a couple of instances in which you've worked on areas in which those markets had broken down?

Gary Reback: A lot of the work I've done is in high technology or information technology and specifically in the software markets. There are some markets that are called network markets like the phone system for example where the normal rules of economics don't really apply as well. In these markets, whoever gets the lead tends to maintain that lead and dominate the market particularly if they exploit their position using anti-competitive practices. So for example, if you use a certain Word processor or if all your friends do, you really have to be on that same Word processor or something compatible. You might like a different Word processing program but if everybody else is on one you don't like, you still have to use that. That creates what called a network effect or a network externality. Those kinds of conditions make the efficient operation of markets more challenging. Markets can still operate efficiently but in those kinds of markets, we have to have good government oversight and appropriate intervention when bad things occur in order to maintain competition and to get the right allocation of resources.

Christopher Mitchell: Now, when you say that, I think what you're talking is smart policies, one of the things that I'm often criticized for by people who don't like my work as someone who I think of as arguing for smart government policies is a knee-jerk sense that government involvement will inevitably hurt the market and make the market less competitive. I'm curious how you respond and I'm sure you run across this idea all the time as well.

Gary Reback: Sure. One way to think about this is the difference between antitrust enforcement, enforcement of the antitrust where laws and regulation. Now, we do need regulation in some cases which we can talk about. But generally speaking, antitrust lawyers think that regulation really is not quite a good approach and it tends to have some of these bad effects that you've eluded to but antitrust enforcement, we sometimes call it the free market approach to regulation. Let me just explain the difference for a second.

Christopher Mitchell: Please do.

Gary Reback: Yeah, in a regulation situation, a group of people are chosen in fact to micromanage the industry and they're not industry managers from the industry. They're chosen not by the shareholders. They're chosen generally by political figures. They get together and manage the industry, sometimes it's a single company that dominates an industry and they manage in a rather intrusive way. They tell the industry who it can sell to and at what prices, where it has to invest more resources and so forth. Now, in that kind of situation, the people who criticize regulation sometimes, not always, but sometimes have a good point. Antitrust works on a different principle. The principle is this, the government sets the basic rules of competition. Then the government steps back and it lets the competitors in the market duke it out under those rules of competition as long as everybody obeys those rules, the government really doesn't have much of a role to play but if somebody breaks the rules, the government doesn't try to regulate them, the government sues them and they bring them before a court and they present evidence and the judge makes a decision just as a judge would in any other prosecution of one kind or another. We find over the years that in most cases, that works the best. Now, there are some cases where the market won't support more than one company like the municipal water and sewage facility or something like that and there you do need regulation. You want to make sure that pharmaceuticals are safe and so you need regulation there and air traffic controllers for example. But in a lot of other industries, antitrust enforcement and free market competition would work a lot better than regulation would.

Christopher Mitchell: Well, and I think there's an interesting point in terms to that. In many ways, we'd like to see, many of us would like to see government breaking up big companies. For instance, I might name Comcast or those other companies that people have suggested breaking up. In your book, at one point, you had mentioned that there was if the government's not able to break them up then almost perpetual lawsuits might be preferable. Is that kind of a middle ground or is that actually just a second option that you described?

Gary Reback: Yeah, I almost described that humorously. I mean, obviously the best thing to happen is to maintain competition in the market. Now, you can generally maintain competition if you block anti-competitive mergers. A lot of big companies have acquired or because the government has let them acquire competitors or in the case of certain broadband companies, to acquire content providers for example and use that as a market advantage that excludes competitors at both levels of competition. I don't know that I go the perpetual lawsuit route until I'd exhausted other things but you don't have to start at breaking up the company, where you need to start is not letting the company acquire market power either through anti-competitive things that it does like exclusionary contracts or something like that or through mergers that increases market power in a way that consumers don't benefit.

Christopher Mitchell: You labeled both horizontal and vertical mergers in that case which you would see as both being potentially damaging and letting a company perhaps gain too much power.

Gary Reback: Well, I certainly would. Now, traditionally, antitrust look at horizontal mergers with greater scrutiny than vertical mergers. As the conservatives began to take power in the antitrust area through what's called the Chicago school that I think your listeners have heard about before, they de-emphasized antitrust scrutiny of vertical mergers and just focused on horizontal mergers. So the consequence is that I thin most people would agree that too much horizontal power through mergers is a very bad thing. We've come to understand through better research though that these vertical acquisitions can also create enormous problems. It's a bigger push though to get a conservative administration to take action in the vertical arena because generally speaking they don't quite understand how the market mechanisms are being affected because if it's a vertical acquisition, you're affecting several different markets in the same supply chain and the analysis becomes more complicated. Nevertheless, I think these days, that these people on the cutting edge of antitrust would say we haven't paid nearly enough attention to vertical mergers.

Christopher Mitchell: Well, I think it's interesting you mentioned sort of the present day where we are seeing a lot more attention. You had mentioned in our previous discussion as you're preparing for this that Elizabeth Warren and others are getting very involved. You also, I know, have a deep sense of the history behind anti-monopoly movements and my impression is is that this is not something that we would expect to come from one party but rather kind of a piece of each party working together to try and decentralize the power ultimately.

Gary Reback: I think so. Of course our problem, Chris, is that the two parties don't seem to be able to work on much of anything these days in Washington. They won't work together on much of anything. But what we've seen over the last several years is people on both the left and the right, political figures beginning to ask hard questions whether US industries have become too concentrated and not just the industries that I work in but industries more generally. Is there too much market power in just a few companies? Certainly a lot of that is focused on the high tech industries. It's not just Elizabeth Warren, senator Elizabeth Warren who would be left off center but it's also some of the conservatives from places like Utah are also focused on these kinds of questions. So for the first time in a long time, I think we have some consensus at least among people who are looking at this area that maybe the lack of antitrust enforcement has been going on too long and we're beginning to have some problems that need to be addressed.

Christopher Mitchell: Well, I think that's where we'd like to push toward the end of the show is most people think of monopoly and they think, "Oh, I'm going to have to pay more when I buy something," but that's not even the worst problem, is it?

Gary Reback: Oh, I think it's not even close to the worst problem. Let me give you several other problems that I think your listeners would consider far more important that too much industry concentration creates. So from an economic perspective, in order to raise prices, when a monopolist or a duopolist, what a concentrated industry does is it restricts output. If you want a present day example of that, think about these big airline mergers that have gone on in the last several years. United Continental and American US Airways, I mean, we're down to the point that there are only a few major airlines in the United States. Now, the consequence of that is of course higher prices in terms of all the fees they can impose but a bigger consequence is that you can't get a seat on a flight when you need it anymore. This has particularly affected small to mid-sized cities across the country and certainly on the West Coast, we have this problem in spades. In order to keep the high prices, the few companies in the market simply restrict the availability of their service. So that to me is a bigger problem than the fact that you may have to pay more. You just can't get it at all. So that's one problem. We'll call that output. The second problem is that the effect of monopoly on innovation. We all benefit from lower prices but we benefit a lot more when there's some breakthrough innovation in high tech or in pharmaceuticals or something like that. So our antitrust policy really ought to be directed at protecting innovation. Now, the problem is the monopolists would use some of its market power to maintain its monopoly, to keep itself from being displaced by some new technology. It would do things to try to restrict a challenger's ability to get to market by engaging in exclusive contracts or by denying access in one way or another. So the net result of all that is that we're denied the new technology that the challenger would bring to the market. Let me give you a couple of examples, so back a couple of decades ago, Microsoft used anti-competitive practices against the company called Netscape that had invented the browser and actually ended up putting Netscape out of business. So that's an example where they tried not just to hurt the competitor but to coop the technology so that they would own the browser market.

Christopher Mitchell: You actually in your book described how Microsoft went to Netscape and basically made them an offer that said basically we won't kill you if you don't compete with us, if you only put your browser on other platforms that are non-PCs, we'll have the PCs you'll have everything else and everyone will be happy. I mean, so they were very deliberate and open about it.

Gary Reback: Yes and obviously, some of the Microsoft people contest the facts in terms of exactly what they said and so forth but from the perspective of the government's case, that's right, the monopolist came in and said, look, you can live on an island and you can have whatever that island brings to you and we'll just have the rest of the world and won't that be fine. Of course, that won't be fine. So if you think back 10 or 15 years ago, Microsoft owned the browser market. The only way you could get to Google for example is by going through Microsoft. 98% of Google's traffic came from Microsoft. If you type on the browser line, Microsoft didn't have to send you to Google. It could have put up a big red warning and say, "Hey, this site has been reported as stealing your personal information. Don't go there." Of course, no one would have gone there and they would have killed Google in the cradle. They would have suppressed search technology which all of used everyday, why didn't they do that? They were already being fined billions of dollars by the European Commission. They ran the risk of reigniting the antitrust scrutiny in the United States so they didn't do it. As a result, we all benefited by this new technology.

Christopher Mitchell: I just found this really worth noting. The compulsory licensing response, another way in which I think people might not necessarily immediately think of that as a response to these antitrust problems but you talked about the history of compulsory licensing particularly around patents and things like that to basically make markets work to solve this problem, I think.

Gary Reback: We have a long history of compulsory licensing in the United States. They was compulsory licensing of a lot of the patents that the phone monopoly had. We have to be careful obviously because you want people to innovate and patent technology but when big companies use patents as a wall against market entry, that becomes a problem. From time to time, in past history as you mentioned, the government's come in and ordered compulsory licensing. You don't see that much anymore because patents have become so much more prominent and the conservatives in particular are reluctant to intervene in the patent market but that would be an effective way to deal with some problems as well. In software, generally speaking, the problem isn't patents. But in other places, yes, that's something really people should look at. Modern monopolies in the high tech area take all your data and prepare dossiers on you which are, I don't know, from my perspective very troublesome. I mean, I think most people understand that when they buy something online, whoever they're buying from has a record and will use that record to help them find other things and that's I think most people would accept that. But when you have a search engine that keeps track of your searches for many, many years and combines that information with what you buy and so forth, they get begin to get at what your political orientation is, where you live on the street, what your religion is, all kinds of things that becomes very, very problematic. We have a problem with privacy in the United States largely because we have several big companies that collect data across the board and that's a problem that Europe is beginning to address but in the United States, really not so much. Finally, Chris, just let me say, one of the other things we have found historically that industry concentration and monopoly does is it puts political power into the hands of monopolists because they can make political contributions and under our law there's a case citizens united, the supreme court case from seven or eight years ago that gives big corporations the right to make unlimited political contributions. So some of the things that big tech companies want to lobby for are more or less okay by me. But other things they want to lobby for bother me a whole lot like the lack of privacy protection. So using monopoly to further political power is something that's also very concerning.

Christopher Mitchell: That's one that I long find very frustrating in part because it's not just at the federal level. That money allows them to basically own state legislatures. They can be powerful at the local level. It's corrupting everywhere.

Gary Reback: Yes, in fact, it's much worst, I think. At least there's some visibility, a bit of visibility at the federal level. At the state level, their projects which have sprung up in various places trying to get some daylight as to what's going on but with the demise of local newspapers for example, we just don't get the kind of coverage we used to. I agree with you, the effect of that kind of conduct at the state and local level is even more disturbing than at the national level.

Christopher Mitchell: So speaking of the state and local level, do you have any recommendations for what could be done at the state and local level to try and strike back at antitrust even though they don't have the power to break them and things like that?

Gary Reback: Yeah, this is a tough question, Chris, because on one hand, these big tech companies have gotten so big, they're multinational and so powerful, I'm not even sure a national government has the power to do much about them. I mean, I've always favored the United States working with Europe to have enough power to try to restrain these big companies. However, with the new administration, a number of people have now been looking to states to try to exercise some antitrust authority over these companies. Then there are states, many of the bigger states have their own antitrust enforcement mechanisms and they have their own antitrust laws. Now, they got to be careful because they have smaller budgets than the national government does. But they might well be able to go after specific anti-competitive practices. So they wouldn't have the wherewithal to do a 10-year case and break up one of these companies but they might be able to go into court and stop one of the big companies from doing something that's anti-competitive that squelches new technology or that hurts consumers. Certainly, a lot of people are looking at that now because we don't think we're going to get much in the way of antitrust enforcement over the next few years.

Christopher Mitchell: Great. Well, thank you for taking the time and sharing some of your experiences and thoughts with us on antitrust.

Gary Reback: I appreciate you asking me and I hope your listeners and others continue the new interest in antitrust. It's time we renewed its effectiveness.

Lisa Gonzalez: That was Christopher visiting with Gary Reback, a well-known Silicon Valley attorney and author.

Christopher Mitchell: They everyone, I just wanted to thank you for listening and helping out to create a stronger Internet ecosystem, making sure everyone has high quality access. Please tell your friends, tell others who might be interested about this show. If you have a chance to rate us on iTunes, please do. Several people already have. We really appreciate all of the comments and we really appreciate you taking the time to listen to us.

Lisa Gonzalez: We have transcripts for this and other Community Broadband Bits Podcast available at Email us at with your ideas for the show. Follow Chris on Twitter. His handle is @CommunityNets. Follow stories on Twitter where the handle is @MuniNetworks. Subscribe to this podcast and all of the other podcasts in the ILSR family on iTunes, Stitcher or wherever else you get your podcast. Never miss out on our original research. Subscribe to our monthly newsletter at Thank you to Arne Huseby for the song, Warm Duck Shuffle, licensed through Creative Commons. Thanks for listening to episode 250 of the Community Broadband Bits Podcast.

Tags: transcriptmarketfree marketmarket powercompetitionantitrust

Community Broadband Media Roundup - May 1

May 1, 2017


AT&T's rollout of broadband serves the rich, shunts mid- and low-income families to the slow lane by Michael Hiltzik, Los Angeles Times

But a new report on AT&T’s strategy for rolling out high-speed Internet service in California underscores what may be the biggest flaw in that argument: When critical infrastructure construction is left entirely to private companies, much of the public gets shortchanged.

The report, released Tuesday by UC Berkeley’s Haas Institute for a Fair and Inclusive Society, shows how AT&T, the largest telecommunications carrier in the U.S. and California, favored the wealthiest communities in rolling out its Internet service. The median income of households with access to AT&T’s fastest fiber-to-the-home service was $94,208 as of last June. That was some 50% higher than the statewide median income of about $61,800 (as of 2015).



Monopolistic control of Internet costing you money and speed by Ben Kleppinger, Advocate Messenger

Search for countywide broadband continues by Jackson French, Bowling Green Daily News



New Orleans uses targeted approach to spread tech awareness, improve digital equity by Zack Quaintance, Government Technology



Recently introduced Maine bill could stymie municipal and public-private fiber builds by


New York

Solutions needed on broadband stalemate by Sun Community News Editorial Board



Panel: To bridge region's digital divide, bring broadband to more areas by Rick Rouan, The Columbus Dispatch


West Virginia

Groups are attuned to Governor Justice's decision on broadband bill by Brad McElhinny, West Virginia Metro News

Justice signs Internet broadband bill by WSAZ News



AT&T's words on Time Warner deal say 'underdog.' Its actions speak otherwise. by Cecilia Kang, New York Times

Image of the Highlander bull courtesy of FrankWinkler via pixaby.

Tags: media roundup

UC2B Partner Ready To Expand This Summer

May 1, 2017

Private sector i3 Broadband recently announced that it will begin expanding infrastructure in the Champaign and Urbana, Illinois, communities. Construction will begin no later than August 1st.

Trading Partners

Nonprofit UC2B obtained $26 million in American Recovery and Reinvestment Act (ARRA) funding to deploy its urban Fiber-to-the-Home (FTTH) project. The project offered residents high-quality Internet access for as little as $19.99 per month.

UC2B found private sector partner iTV-3 to take over operations and invest further in the network in 2014. One of the reasons UC2B chose iTV-3 was the company’s commitment to invest its own resources into expanding so others in the Urbana-Champaign community would have access. iTV-3 expanded, but slowly.

When iTV-3 decided to sell its assets to Countrywide Broadband in 2016, UC2B had the right of first refusal for fiber deployed by iTV-3, but decided not to exercise that right. Countrywide created i3, based in Peoria, to serve current and future subscribers in the region. While those watching the transaction were concerned about losing a local partner, folks the area were also optimistic because i3 has the capital for a more aggressive expansion schedule.

Aggressive Five-Year Plan

Mike Whitaker, VP of sales and business development of i3 told the News-Gazette that the upcoming expansion will serve an additional 2,500 homes. The company plans to add the same amount each year for the next five years with half in Champaign and half in Urbana.

Deciding where to expand is based on several factors, including whether or not a neighboring area already has service and the percentage of interested households. When early partner iTV-3 used pre-registration to determine where to build, they required a 50 percent sign up rate in a neighborhood prior to deployment; i3 will use a lower 35 percent threshold.

Whitaker and i3 are optimistic, "You'll start to see more significant coverage," he said. "We're very happy with the way we've been received in Champaign-Urbana."

The company also plans to open a retail office in the area this summer.

Tags: uc2bchampaign-urbanaillinoispartnershipexpansionitv3i3FTTH

Visualizing The Leverett Approach : New Resource

April 29, 2017

DHInfrastructure and the town of Leverett, Massachusetts, just released a slide presentation that provides an in-depth look at the community’s municipal network LeverettNet. The series of slides visualizes and includes information on:

  • Contractual Arrangements
  • Allocation of Responsibilities
  • Financial Arrangements

The document breaks down how each of the multiple parties is involved in Leverett’s approach. In addition to operator services and maintenance agreements, this documents visualizes where pole attachment and communications services agreements come into play.

The presentation also offers valuable financial information for other communities who may be interested in taking a similar approach. Total project costs, along with budgeted operating and maintenance costs, are available from the authors.

Leverett (pop. 1,900) has been celebrated in the media as the small town that took the initiative to improve its connectivity because they could not get fast, affordable, reliable services from the national providers. You can read more about their solution in a report from the Berkman Center and by catching up with the many stories we’ve shared about Leverett.

May 5th Update: DHInfrastructure has published an updated version of the presentation with additional slides. Check out the expanded version here.

Tags: leverettmassachusettspartnershipresource

Upgrade In The Corn Belt : Coon Rapids, Iowa

April 28, 2017

Coon Rapids, Iowa, recently began its upgrade project, replacing its cable network with Fiber-to-the-Home (FTTH). Coon Rapids Municipal Utilities (CRMU) hopes to have the citywide project completed by late summer 2018.

Experience From The Eighties

CRMU started offering cable TV to the community in 1982. At first, the system only offered about 35 channels. In 1996, community leaders began considering the possibility of offering Internet access and formed a task force to address the idea. After talking with residents and researching other communities’ approaches, the task force recommended Coon Rapids move forward with establishing a communications system.

In 1996, 87 percent of votes cast in a referendum were in favor of investing in a municipally owned cable communications system and a similar percentage voted to have CRMU be in control of the system. By the end of August, just a few weeks after the vote, CRMU was offering dial-up Internet access.

The utility constructed a fiber-coaxial system in 1998 and within a year CRMU was providing telephone, Internet access, and cable TV services via the community network.

Coon Rapids is home to about 1,300 people and is located about an hour west of Des Moines.

Tags: coon rapids iaiowaupgradeFTTH

Maine Bill To Restrict Authority Up For Hearing May 2nd

April 27, 2017

Earlier this week, we learned that a bill in the Maine House of Representatives had been introduced that would steal local telecommunication authority from communities working to improve their connectivity. LD 1516 / HP 1040 was assigned to the House Energy, Utilities and Technology Committee and is scheduled for a hearing on May 2nd at 1 p.m.

No Barriers...Yet

Maine is a mostly rural state that doesn’t draw much investment from national cable and telephone companies, so in the past few years local folks have started taking steps to improve Internet access for themselves. Their efforts have gotten the attention of the big corporations that fear competition and, since Maine doesn’t have restrictions on municipal networks, it appears to be one of the next targets. Rep. Nathan Wadsworth’s bill imposes a number of restrictions that threaten to derail current or proposed projects to bring better connectivity to several Maine communities. 

The bill is deceivingly titled “An Act To Encourage Broadband Development through Private Investment,” but it will discourage any new investment that may attract new entrants to Maine.

Let Them Know What You're Thinking

If you want to contact members of the committee and tell them that this bill will discourage investment, rather than encourage it, contact information for all the members is available here. The best time to stop a bill is early in committee. If one of these elected officials represents you, be sure to let them know.

Tags: mainelegislationme ld 1516me hp 1040rurallocalgrassroots

Charles City, Iowa, RFP : Responses Due May 5th

April 27, 2017

Charles City is looking to join the ranks of Iowa municipalities that offer fast, affordable, reliable connectivity via publicly owned fiber. The town of approximately 7,600 people released a Request for Proposals (RFP) for a Fiber-to-the-Premise Feasibility Study earlier this month. Responses are due May 5th.

In 2005, Charles City voters approved a referendum that gave the city the authority to establish a telecommunications utility. They’ve already taken steps to pursue an Internet network infrastructure project, but incumbents Mediacom and CenturyLink have made marginal improvements in local services whenever the city appeared to move beyond a the feasibility study phase. So far, the city has held off from making their own investment.

In 2014, they joined with ten other Iowa communities to study the possibility of a regional effort, which later became known as the Iowa Fiber Alliance (IFA). The positive outcome of that study encouraged Charles City to continue on and, after funding a local preliminary study, they decided to commission a full feasibility study.

In this RFP, Charles City states that its intention is to offer retail services, but the study should also include information about other business models like open access and public-private partnerships. They are looking for several proposed financing options, including General Obligation (GO) bonds and revenue bonds.

Iowa Fiber Alliance

The regional effort in which Charles City is participating may or may not come to fruition, so the community needs its consultant of choice to consider three different possibilities. From the RFP:

SCENARIO 1: IFA builds a fiber transport network of which Charles City has ownership rights. The City shares a proportional share of network construction and operations. The IFA aggregates Internet bandwidth among members and provides at least two diverse connections to peering points. For video and telephone service architecture, Charles City receives services from other IFA members. 

SCENARIO 2: The IFA is not built. Charles City still partners with another company for Internet bandwidth, IP video, IP telephone switching services but provides for its own transport capacity by either leasing fiber or building fiber needed for redundancy. 

SCENARIO 3: Charles City connects to another company for Internet bandwidth using redundant built or leased fiber, but builds its own IP video headend and IP telephone switching capabilities. 

View the rest of the RFP for more details.

Charles City RFP, Fiber-to-the-Premise Feasibility StudyTags: charles city iaiowarfpFTTHconsiderationfeasibilityrural

Tacoma Resolution To Protect Privacy With Click!

April 26, 2017

Recently, state lawmakers in Minnesota passed legislation to protect Minnesotans’ online privacy. In Tacoma, the City Council made a similar move by passing a resolution asking the Tacoma Public Utilities board to prevent ISPs on the city’s fiber network from collecting and selling personal online data. The resolution was an example of local authority stepping in to fill the gap when federal policy fails.

When The State And The Feds Don't Act

Bills were introduced in the Washington State Legislature this session, but state lawmakers didn’t turn them into law. By mid-April, it appeared that the bills weren’t going anywhere so City Council members felt the need to address the issue after the Trump Administration’s FCC allowed privacy protections to lapse.

“I’ve just heard lots of concerns from community members and from boosters of the Click network about privacy,” said Councilman Anders Ibsen… “This also ensures that any private entity that rides our fiber, that uses the Click network, is held to certain ground rules, just really basic ground rules about respecting the privacy of their customers.”

Tacoma's Click! publicly owned network serves about 23,000 people. Over the past few years, the community has debated the future of the network and is still considering several possible scenarios. For more, check out our four-part series on the network's history and an analysis of the benefits from this public investment.

Local Network = Local Control

Like many of the local and regional ISPs that tend to offer services via publicly owned infrastructure, the two providers on Click’s network already commit to subscriber privacy. Since the announcement that privacy protections would be rolled back, several municipal networks that offer retail services have also assured their subscribers that collecting and selling information such as location data, search history, app usage, and browsing history just isn’t in their wheel house. Chattanooga’s EPB Fiber and Optilink in Dalton, Tennessee, are a few that have let customers know that they don’t use, monitor, share, or sell the type of data the new regulations allow ISPs to collect and sell.

Fletcher Kittredge, founder and CEO of GWI, an ISP offering services via public fiber in several Maine communities, is very opposed to data collection. He has stated his company would collect and sell data “over my dead body.” When privacy issues have come up in the past, national companies like AT&T have collected and sold data hand over fist, but smaller companies like Xmission in Utah are even willing to stand up to the feds to protect customer privacy.

Because the city of Tacoma is still considering the future of its network, the City Council included a provision in their resolution. If the asset is eventually sold to a private provider, the resolution requests that the privacy protections be included in the negotiations, at least until the state or federal government embraces similar protections.

While the final decision about adopting the new rule is up to network officials, the city’s attorney reported to the council that Click’s general manager sees no problems in adopting the new rule.

From Resolution 39702:


Section 1. That the City Council hereby requests that the Tacoma Public Utility Board (“Board”) prohibit Internet service providers (including Click! Network pursuant to an “All-In” Retail Business Plan) who have entered into agreements with Tacoma Power to use Click! Network from collecting or selling personal information from a customer resulting from the customer’s use of the Internet without express written approval from the customer.

Section 2. That the City Council hereby requests that the Board prohibit its Internet service providers (including Click! Network pursuant to an “All-In” Retail Business Plan) from refusing to provide services to a customer on the grounds that the customer has not approved the collection or sale of the customer’s personal information.

Section 3. That the City Council hereby requests that in the event that Click! Network is sold or leased, the prohibitions as set forth in Sections 1 and 2 above be included as condition of the sale or lease.

Section 4. That the prohibitions requested in this resolution shall remain in effect until such time as either the federal government or the state of Washington enacts the same or broader privacy and security protections for Internet users.

Check out the full text of Resolution 39702.

2017 Tacoma, Washington, Resolution 39702Tags: tacomawashingtonclick!privacyresolutionlocal

Transcript: Community Broadband Bits Episode 249

April 25, 2017

This is the transcript for Episode 249 of the Community Broadband Bits podcast. We have a returning guest, Alyssa Clemsen-Roberts of the Pedernales Electric Cooperative in Texas. She provides a first-hand perspective of the decisions and challenges facing electric cooperatives. Listen to this episode here.

Alyssa Clemsen-Roberts: I think also as you watch come cooperatives have great successes you'll see others follow.

Lisa Gonzalez: This is episode 249 of the Community Broadband Bits podcast from the Institute of Local Self Reliance. I'm Lisa Gonzalez. Alyssa Clemsen-Roberts is Vice President of Communications and Business Services for Pedernales Electric Cooperative. Pedernales serves a large region in Central Texas. In this episode, Christopher gets some honest perspective from someone who can offer unique insight from the world of cooperatives. They discuss a range of issues, including new Legislation from Tennessee, and how it will effect cooperatives. Alyssa and Christopher also get into the challenges that cooperatives must consider, when determining whether or not to offer connectivity to members. You can learn more about Pedernales at Now here is Alyssa Clemsen-Roberts and Christopher talking about cooperatives and the challenges of deciding whether or not to offer connectivity.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits podcast. I'm Chris Mitchell. Today I'm back with Alyssa Clemsen-Roberts, the Vice President of communication and business services for Pedernales Electric Co-op. Welcome back.

Alyssa Clemsen-Roberts: Thanks Chris, Thanks for having me.

Christopher Mitchell: For people who have been long time listeners, Alyssa has been on the show before, although she was not with Pedernales before. Alyssa you have a lot of experience working with rural utilities and thinking about broadband, tell us a little bit about Pedernales. It's one of the nation's smaller electric co-ops, if I remember correctly.

Alyssa Clemsen-Roberts: Yes it is actually the nation's largest electric cooperative. We have about 289,000 meters at this point. Last year we added 12,000 meters, so we will hit the 300,000 meter mark this year and for those of you who don't know, 12,000 meters is about the size of an average cooperative. We're adding basically a co-op every year and our territory spans, it's almost the size of the state of Massachusetts to put it in perspective.

Christopher Mitchell: Yeah.

Alyssa Clemsen-Roberts: It's big.

Christopher Mitchell: I think that 3 out of 4 of the municipal electric companies have 7500 meters or something like that. So you guys, you're almost like Amazon. You're not only growing, you're growing faster than everything else.

Alyssa Clemsen-Roberts: Yes, it is an incredible rate of growth which is a good set of challenges, but it creates challenges none the less.

Christopher Mitchell: Right. Now Pedernales itself is not getting into broadband anytime soon. But I wanted to bring you back on for a candid conversation about some of the challenges, the realistic discussion about what's happening with co-ops as they are considering building a network. Not to say we haven't had realistic discussions before, but Alyssa, I've always enjoyed your unvarnished, I'm going to tell it to you straight kind of approach. But we had some breaking news that we can cover as well. What's happening in Tennessee, so maybe we'll start there. You know, Tennessee is about to sign this bill. What are you thinking about this bill about rural broadband in Tennessee?

Alyssa Clemsen-Roberts: Well I think the fact that they finally taken the handcuffs off electric cooperatives in Tennessee is fantastic. I know that there are several co-ops in Tennessee that have been talking about this for the last couple of years, but they kind of been living in this world of uncertainty, if I do this will the legislature slap me down later, if I do this am I going to make this investment and then find that I'm not allowed to do this? Which you've seen municipal electrics have that situation so they've really been living in a world of uncertainty wanting to provide this service to their members but just cautious, and there's not anything wrong with being cautious so I think that was a big win. The idea that muni's aren't able to come out beyond their boundaries and serve unserved folks in rural America is a sad day for Tennessee for sure.

Christopher Mitchell: Right, now in Tennessee the law that was prohibiting your electric co-ops from doing fiber was really at odds with Federal law and arguably in violation of Federal law, it would have been struck down if the co-ops had wanted to make a big court case about it, but I think the co-ops are more focused on what they could do locally rather than having to hire lawyers and get involved in a protracted legal dispute.

Alyssa Clemsen-Roberts: That really is the issue. So do you want cooperatives spending money to fight this in the courts, or do you want cooperatives saying, hey let's put our resources into our communities and actually build a network. So I think that again was a win for the co-ops, because now they can put their resources where they choose to instead of again ending up in a large legal battle with these behemoth for profit corporations that, they're good at this and they don't mind spending a ton of money on it. So I think that's the equalizer though when you talk about electric cooperatives and big tel co, big cable. I always say they have the money and the lobbyists but we have the people, and that matters.

Christopher Mitchell: I think that's right, now I just wanted to note for people who have been following our website and maybe our press releases where we've gotten a lot of coverage we've been just blasting this law coming out of Tennessee, which the governor is still expected to sign as we are recording this show, and probably will have signed by the time it airs. Because of that limitation of the electric municipal providers because it just doesn't make any sense. But I am very excited that co-ops will be able to expand with fiber. The last thing I wanted to cover though was this kind of intrigue about whether or not they would be allowed to offer television services, and I thought you could tell us a little bit about why that's important, because it seemed like it almost was lost in the larger discussion about broadband.

Alyssa Clemsen-Roberts: Well it is. The thing about the television services, I think you're seeing, so a newer generation, the younger generation, and they're younger than I am, but they're cutting that cord when it comes to cable. They're going to a pure, digital format and they're fine with that. But then everyone else is still kind of like, man I really like my cable TV. And so when you take that option off the table, it is very hard to get folks to sign up for your broadband service. So by inserting that prohibition initially, you were basically crippling the cooperatives or limiting their take rates or making it much, much harder to make these projects feasible as AT&T very well knows, because when they made the argument with the FCC that they should be allowed to sell DirecTV, that was their exact argument. So it's kind of ironic that they're own argument came back to bite them.

Christopher Mitchell: It's not the only time that could happen, so I'm glad that it does happen from time to time. And it's worth noting of course that AT&T owns a lot of rural areas by virtue of the fact that they own DirecTV and so for them trying stop the co-ops from providing television service is just yet another way in which they're trying to establish a monopoly for their own services.

Alyssa Clemsen-Roberts: Yes, and it's funny because every time you see this crop up in a state legislature, it comes out like it's a for broadband competition bill, but as you read the bill it becomes very, very obvious that all they're trying to do is hold onto their monopoly.

Christopher Mitchell: Now let's talk about some of the challenges and some of the reasoning that happens when a co-op is thinking about whether or not to get into the fiber game. One of the things that you've identified is just the comfort level with where they are. You have an entity that has done a good job providing electricity, in fact we've actually been passing a book around our office talking about rural electrification and the early co-ops, and it is amazing how much better they were than the private companies in the few areas in which private companies deigned to invest in rural areas. So these are rural electrics that have done a really good job of providing service in hard to reach areas. I may criticize them from time to time with long term power purchase agreements on coal, but the fact is the lights generally stay on. And they're very comfortable in that business area.

Alyssa Clemsen-Roberts: And I think that is a big issue, and it's something that we talk about a lot in the co-op world. We went from this, you think about in the 1930's when, and 1940's when rural electric cooperatives started providing service. I mean this was a territory again no one wanted to serve. For profit electric companies were like, can't be done, won't be done, and kept providing all these obstacles to make this happen. Rural groups got together, rural community leaders and they said we're going to do this, we're going to take this risk. So we have kind of gone from this high risk, high reward model that we originally created into a very comfortable low risk, still high reward, but low risk model. And so I think when you make that transformation over time, I think it's hard to go wow, we've got a lot at stake here. I think you're also talking about in terms of investment, some of these investments into fiber will equal or outpace what the cooperative has invested in electric infrastructure, and I think that causes a moment of pause too. And then you have this second idea that should rate payer funds for electricity be used to provide broadband service, and be used to make those initial investments into infrastructure. I think the cooperatives that are doing broadband right now have done a very good job of segmenting that, saying you know we're going to use our good credit and our good faith as the electric cooperative to leverage for funding, but your rates will not be subsidizing the broadband business. Instead they've taken this model where they're almost utilizing their broadband service to help subsidize the electric side of the business to keep rates low. Again I think it's one of those decisions where you have companies that are so stable and so comfortable that it's very hard for them to go out into this world that is very competitive, very cutthroat. Every other day we're watching a pole attachment bill pop up across the country, you watch trying to limit cooperative broadband trying to limit municipal broadband. I think it's also do you want to poke that bear. Do you want to get into a dog fight with these large corporations and I think it's something that cooperatives have to weigh, but sometimes I worry that they weigh too much into that.

Christopher Mitchell: It's something that is very complicated, and although when I weigh a lot of those complications and I try to think about it neutrally from the perspective of a person living in these areas I generally think the co-ops should be at the minimum seriously considering it and penciling out the numbers, and maybe just starting in the areas where it looks best, but I want to pull out a couple of things you said and just dive into them quick. I think one is, recognizing that this is riskier than electricity.

Alyssa Clemsen-Roberts: It is.

Christopher Mitchell: The demand for electricity was eventually much greater. I don't know that it was immediately, but in rural areas where co-ops are doing this I think we're seeing take rates in initial areas that are in the low 40's to upper 60's depending on the territory. And I think electricity take rates were higher in the times when that was introduced.

Alyssa Clemsen-Roberts: Yes, that would be correct. You know we talk about the low 40's to low 60's and nothing more, that's a pretty good take rate.

Christopher Mitchell: It is, right.

Alyssa Clemsen-Roberts: When you're talking about cox communications service. And again you have to adjust your thinking. You know, I'm saying you have to adjust what you're modeling this on. It's worth noting that that is true. But again, it's out of our area of expertise, it's out of our comfort zone and I think that's a hard thing, but I come back to everyday another cooperative is doing a study, is taking a look at this, and I think it's going to continue to grow where we're seeing an incredible amount of retirements in our industry. I think if I were two years, three years, four years from retirement I would have a hard time making a decision to explore something like this.

Christopher Mitchell: Yes.

Alyssa Clemsen-Roberts: It's hard to make those decisions when you're going to leave this for someone else, so I think as we continue to see our industry change and evolve and these large amount of retirements. I think also as you watch some cooperatives have great successes, Midwest Energy up in Michigan, Co-Mo in Missouri, Bark Electric down in Virginia, I mean you've got this wide variety of cooperatives that are really succeeding, I think you'll see others follow. But they just want to be sure.

Christopher Mitchell: Right. I've been saying that I feel like this is a viral spread. I got some of this talking with John Chambers at Conexon where it seems like, I see this in municipal broadband as well, where if you live in a small community and no one for a hundred miles around you has good Internet access, you're okay. Everyone's kind of upset, frustrated, wants something better but you're not losing businesses at the same rate where as if 30 miles away you can get very high quality Internet access. Then suddenly you're in a situation where you have to do something. And I think that as we see a few of these rural electric co-ops doing it across their entire footprints, it's just going to put pressure on those around them to do it because otherwise we're going to see population shifts. And that's a real threat to the existence of the cooperative which if electricity demand declines then they're really going to be in a bad spiral.

Alyssa Clemsen-Roberts: I absolutely agree, and I think even those that don't have someone next to them doing this, we're seeing population shifts already. I think it was 2010 the census had for the first time showed that there was a decline in population in rural America. They attributed this to a number of factors. Kids grow up, they go to college, they leave their community, they can't find jobs back in their community, so what do they do? They move to the city, they move to suburbia, they move to another community that has jobs available. Baby boomers are retiring. They used to retire in droves back to rural America. They are not retiring back to rural America now. Why? Because they're used to having these services. They want access to the Internet. They want to be able to see their grandkids. They want to be able to communicate with them. They want to be able to read the news online. They want to be able to watch Netflix. When you take all of these things into place, you're going to continue to see those shifts, absolutely. But I think it's coming everywhere, I don't think it's just going to be in those areas where the next store has it, I think we're going to continue to see that shift throughout all of rural America. It's a ripple affect. It may be more obvious, when 30 miles down the road you got it, but I think everybody's feeling it right now.

Christopher Mitchell: I think you're right. But I do think that we'll see more motivation perhaps in areas that face that immediate neighbor.

Alyssa Clemsen-Roberts: Oh absolutely.

Christopher Mitchell: But we agree we're just emphasizing different aspects of it.

Alyssa Clemsen-Roberts: Yeah.

Christopher Mitchell: I want to talk a little bit about the financial challenges. And I'll set this up by noting that another difference is that when we establish the rural electric cooperatives they got territory. They got a monopoly on that territory. Having a monopoly on services in a territory enables you to get financing in ways that you cannot get if you're a competitor, even if you're competing against a very weak, large company that has terrible customer service, it may be difficult to get financing. Now some cooperatives may be able to leverage their electric base as security for financing. And some may choose not to do that, some may be prevented from doing that, I'm guessing, because for instance if you're buying power from the Tennessee Valley Authority I don't think they'll let you just cross subsidize in that way. As we talk about financing, let me know, did I sum that up fairly correctly?

Alyssa Clemsen-Roberts: You're absolutely right it is a big issue. And again, some are not willing to do it and some are not able. And I think there's also this idea of, it's a little bit riskier so the interest rates go up, and every time the interest rate goes up it makes the loan or the investment a little less feasible. I think you're also seeing some power struggles at this point even within R.U.S., and where they can finance and how they can finance. Then you've got CoBank and CFC as alternatives and other funding mechanisms. But traditionally co-ops, we borrow from R.U.S.. But now you've got this conundrum because the rural telcos borrow from R.U.S. too.

Christopher Mitchell: Yeah, and we're seeing real efforts by some of the rural telcos to say that it is unfair for them to have to compete with rural electric company. There's one instance in which I can't divulge who it is because they've wanted to keep it quiet, but there's an electric company that's building out to it's territory and it got some rural utility service funds to use in that territory. Maybe for smart grid, maybe for broadband, I'm not entirely aware of it, but the point is they decided to expand to a near-by development that was not in their territory, and is not getting any access to the R.U.S funds but they were nearby, and they really wanted service from the electric co-op and so the electric co-op decided to go ahead and do it. Rural telephone company, very upset about this and saying it was totally unfair, and so trying to basically push R.U.S. to stop giving money to rural electrics for broadband. Unfortunately I think two different entities that both care about rural America, kind of going at it with one of the few sources of money that is out there.

Alyssa Clemsen-Roberts: I would move your kind of to two rural entities, one of whom kind of cares about Rural America--

Christopher Mitchell: Well some of these rural telephone companies--

Alyssa Clemsen-Roberts: I feel pretty vocal on this.

Christopher Mitchell: Right, no and I feel free. I want to be totally honest, if you think I'm wrong, tell me I'm wrong, it's the only way I'm going to learn. Some of these rural telephone companies are telephone cooperatives though, and like any other entity, there are good apple and bad apples. We're not talking about CenturyLink.

Alyssa Clemsen-Roberts: I absolutely agree, and this is the thing - there are some rural telcos who have done a great job of re-investing the taxpayer funds back into their networks to provide good service. I absolutely agree with that. But there are many who have not been taking that subsidy from the state and from the Federal Government all of which is funded by you and me and every other person in this country as a line item on our phone bill, and they have not been re-investing. In fact, I would love for someone to take a look at how much money these rate of return carriers have gotten from the state and the Federal Government, and plot out what that would have built in terms of fiber network.

Christopher Mitchell: Oh I so want to do, it's so hard to get this money, this information, it's just ridiculous.

Alyssa Clemsen-Roberts: Yes, it is, and they make it hard for a reason. And I will tell you having looked at this from a couple different state perspectives, you'll probably want to take a shower when you're done reading.

Christopher Mitchell: Yeah.

Alyssa Clemsen-Roberts: Because what they could have done with this funding is incredible and I will say to these folks, fair is fair, the fair comes to town once a year. We're all grownups, let's move on. And second of all, had you been providing affordable competitive service, we wouldn't be looking anywhere near you to provide service, because that's not what we do. But you don't get to cherry pick the areas that have some density, and provide them, and leave everybody else behind. Because we are going to come and compete with you in those areas, because that's how we further fund rolling out into those areas that you have left behind for years, and years, and years. So my advice to the rate of return carriers, as much as the same of my advice to the price cap carriers; do it, provide the good service, provide affordable service, and you won't have any problem with us. But if you're going to continue to collecting money from our members, and from rural America, and from everybody else in this country, and not provide the service, well you should know we're probably coming for you.

Christopher Mitchell: Now it's worth just noting that when you say rate of return carriers you're generally talking about the smaller providers, the price cap carriers or the big companies, Frontier and CenturyLink, AT&T, those sorts of folks, for people that aren't as familiar with those terms.

Alyssa Clemsen-Roberts: Yes, electro cooperatives are not federally subsidized. We get low interest loans, but it's not a grant giving handout where they've rolled up money from rural America and from urban American and said here, we're going to re-distribute this pot of money for this.

Christopher Mitchell: Forever.

Alyssa Clemsen-Roberts: Right, forever! Our loan programs are fully paid for by the interest we pay on these loans, and so there's this whole idea that it's not fair, and again I would say, if you're providing the service, we don't want any part of it, you provided it. But when you look at this Country and you go okay 4 out of 10 rural American's don't have service, somebody's not providing the service and taken the money, and that's a problem.

Christopher Mitchell: And this is where I get in my sort of small government, proper financial approach hat. I get frustrated with how government programs have been designed historically, because with electricity there was this a sense of we're going to be fiscally responsible, and we're going to be and we're going to give capital loans. Perhaps there was some level of subsidy in the early years, I don't know whether or not the loans are below market anymore, if they were a little bit below market to begin for the electric co-ops, but there was never a sense that ongoing subsidies for electricity. But telephone -

Alyssa Clemsen-Roberts: No, correct.

Christopher Mitchell: There always has been. And in part, it's because of the higher operating costs. When you subsidize crappy technology like DSL in rural areas, it's that you are locking in a high operating cost which then also has to be subsidized. And so if you look at over 10 years of what we're going to get with 10 mega-bit by one mega-bit DSL from AT&T or CenturyLink or whatever, we're going to be paying far more for that than it would have cost to do fiber, because with fiber you no longer need that operating subsidy in most cases.

Alyssa Clemsen-Roberts: Yeah, that's absolutely right, I would include the rate of return carriers in that argument. Again, I would say look at their funding levels. How much have they been getting and have they been building their business on what's best for rural America, or have they been building their business based on this rate of return model, this idea that the more you spend the more you get and not necessarily making good, economic decisions with the best interest of their members and/or customers at heart.

Christopher Mitchell: So let's turn to one of the challenges that I think is going to be facing co-ops, co-ops like yourself at Pedernales if you ever were to go into this, which is when you have a population split across suburbs, exurbs, and then perhaps farmers, just to simplify rural, really spread out member-owners of the cooperative. It seems to me that we are seeing some conflicts between co-ops where a board might be dominated by suburban interests a little bit more, and less willing to invest in connecting everyone. And I fear that we may see the co-op, some co-ops, lose that sense of what brought them together in the first place, which was to make sure that the needs of everyone were ultimately met.

Alyssa Clemsen-Roberts: Yeah, I can see that being a problem, that's kind of the unique aspect of P.E.C., our board is split up geographically, and they've drawn the lines, so we have a pretty good balance I think on our board of rural interests, and then our more maybe suburban/urban interests, so we aren't seeing that. What we're kind of seeing is this is a large investment, parts of our territory are really well served. I have Google fiber in my home and I'm a P.E.C. member. And let me tell you, love the Google. I just love it.

Christopher Mitchell: Just keep rubbing it in. Rub it in, yeah.

Alyssa Clemsen-Roberts: But you know the problem is, you have to have some of this to be able to help subsidize as you head west in our territory. On this side of our territory we're very dense, there's a lot of population, there's a lot of business. But as you move west across our territory we get down to one or two homes per mile. No one can make that feasibly work on a stand-alone project. And that becomes a little bit of a problem too because you need this area where I live in southwest Austin, into Dripping Springs in the central Texas area. You need this to help make the other feasible. So it becomes harder and harder as we continue to watch big providers cherry pick. I would say to Google, I think it's fantastic that you're providing broadband service in these -

Christopher Mitchell: We just lost all audio. I don't know if you can still hear me?

Alyssa Clemsen-Roberts: Was it your end or my end?

Christopher Mitchell: No, it was our end. Our entire office. Again, this is the second time in a row that Comcast has disconnected us, we've had to reboot our business class service. It happened right after you were talking about how great your Google connection is, it's worth noting.

Alyssa Clemsen-Roberts: Yeah. Oh yeah.

Christopher Mitchell: This is -

Alyssa Clemsen-Roberts: Which is so funny, I joked with you that maybe it was AT&T because I keep messing with them.

Christopher Mitchell: Nope, this is just standard run of the mill dealing with Comcast in a business environment. Oh yeah, once everyday it seems like lately we get disconnected and we have to reboot the old modem. At some point we're going to have to call them, at which point they'll explain to me that it's something on my end I'm sure.

Alyssa Clemsen-Roberts: Yes.

Christopher Mitchell: For some reason it's their modem I have to reboot. We've rebooted every other piece of networking equipment. With that aside, which I hope Lisa keeps in the show, you were just describing the challenges of expanding west given the cost when you get down to the low densities.

Alyssa Clemsen-Roberts: Yes, well that's the thing with Google fiber that I had kind of gotten off on a little bit of a tangent but I think it's worth exploring. Google is this great company, right? They basically challenge the status quo that people don't want fiber. People do want fiber. So I would say to Google, and I'm going to challenge them openly, why don't you keep exploring west? You've done this in this suburban and urban setting and you're having some successes, why don't you do something truly revolutionary and continue to press this model and push west. It's great that they can do it when you've got 40 and 50 and 60 homes per mile but why don't you keep rolling west for us and provide some great service because I think that the model has been proven over and over and over again. I'd love to see Google take on that challenge and do something truly revolutionary. Because, what they've done in urban and suburban America isn't really revolutionary. But do something really cool.

Christopher Mitchell: It does seem to be over though, unfortunately. There's been a number of people that have argued that yeah, that would be revolutionary up hear in Minnesota, I've seen a number of people in rural areas that were willing to do whatever it would take if Google would prove that there was a business case for building out to them. Which as you know -

Alyssa Clemsen-Roberts: They don't even have to prove it. The co-ops have proved it. So they're going to take credit again for something that's been proven.

Christopher Mitchell: Right, although it's worth noting, and this is something I think we can't emphasize enough, that a business case is different from business to business. A business case for a co-op is different in that a co-op want's to break even. A business case for AT&T, is that it has to make a killing. It's not enough just to be a little bit profitable, its shareholders are expecting increasing profit over time. It's worth noting for people that this is one of the reasons why we see co-ops being so successful in rural America, because it's the right tool for the right job.

Alyssa Clemsen-Roberts: I absolutely agree, and I think it's the argument it's too expensive to do it in rural America, and I think you're point is well taken. It's not that it's too expensive, it's that your rate of return isn't enough. And there's a big difference between being too expensive and you can't make enough money off of it. And I would agree that a for profit company has different factors to take into account, but I would also argue that as a large corporation in this country, you have an obligation, and I think that obligation extends at times beyond your shareholders. It extends to the betterment and the good of America as a whole. Not everything is a bottom line.

Christopher Mitchell: Right and it's certainly a discussion that's popping up again and again. Interestingly I was just reading a book about a history of monopoly and economics, it was called Railroad Economics by Perlman, I think. It's a leftist economics case for why we don't need economics, because a lot of economists tend to be sellouts and just defend the power structure no matter what. I actually really like the tools economics provides but I'm getting a little bit deep just to make this point that well literally 100 years ago as we had the economy becoming taken over by large trusts and monopolies there was a sense that if you had a monopoly you had an obligation to do more than just figure out how to do well for your shareholders. That was called welfare capitalism, I think, was the term that was used in this case. I have to say I didn't find it particularly persuasive but it's a heck of a lot better if you have monopoly, if they are going to be doing something good. If they can't do anything about AT&T, well you certainly can't live with them just screwing us constantly.

Alyssa Clemsen-Roberts: Right. And this is when our phone goes dead again.

Christopher Mitchell: Right. Well I've really enjoyed the conversation, and so I really appreciate your time once again to talk about some of these issues and I think for people who are still trying to figure out what's going on in rural America I hope this helps.

Alyssa Clemsen-Roberts: Yeah, I think it's vitally important to the economy of our country. Imagine if we hadn't electrified rural America. OR what if we said to rural America you can only have two hours of power. Or you can only have enough power to do this or this. Would we be the great nation that we are? And I think we're at that tipping point with broadband. I think it's vital to the economic interests of our nation that we have this opportunity for everyone.

Christopher Mitchell: Yes, I absolutely agree. It's interesting, because if electricity didn't reach all of America it's possible electricity wouldn't be as important to us. We may have evolved in different directions with the way markets work and things like that. But by creating much larger markets we certainly led to advancements more quickly because we have increased productivity. And if we don't expand high quality Internet access to everyone, we won't be able to take full advantage of a high quality Internet. It will not be as good if we deny it to certain people, so there's a little bit of a self-fulfilling prophecy that we need to keep in mind as we're deciding how to connect folks or whether to cut them off effectively. Thank you so much, I hope you have a great weekend.

Alyssa Clemsen-Roberts: Thanks, you too Chris.

Lisa Gonzalez: That was Christopher and Alyssa Clemsen-Roberts, Vice President of Communications and Business services for Pedernales Electric Cooperative in Texas. We have transcripts for this and other community broadband bits podcasts available at Email us at with your ideas for the show. Follow Chris on Twitter, his handle is @communitynets. Follow stories on Twitter. The handle is @MuniNetworks. Subscribe to this podcast and all of the podcasts in the ILSR family on iTunes, Stitcher, or wherever else you get your podcasts. Never miss out on our original research, Subscribe to our monthly newsletter at Thank you to break the bands for the song Escape, licensed through creative commons, and thanks for listening to episode 249 of the Community Broadband Bits podcast.

Tags: transcriptruralelectriccooperativefiber-to-the-farmpedernales electric co-op

Bill To Limit Local Authority Appears In Maine

April 25, 2017

Maine is the latest battleground for local telecommunications authority. A bill in the state’s House of Representatives threatens to halt investment in “The Pine Tree State” at a time when local communities are taking steps to improve their own connectivity.

"I Do Not Think It Means What You Think It Means"

Rep. Nathan Wadsworth (R-Hiram) introduced HP 1040; it has yet to be assigned to a committee. Like most other bills we’ve seen that intend to protect the interests of the big national incumbent providers, this one also has a misleading title: “An Act To Encourage Broadband Development through Private Investment.” Realistically, the bill would result in less investment by discouraging a whole sector - local communities - from making Internet infrastructure investment. 

Large national companies have thus far chosen not to invest in many Maine communities because, especially in the rural areas, they just aren’t densely populated. In places like Islesboro and Rockport, where residents and businesses needed better connectivity to participate in the 21st century economy, locals realized waiting for the big incumbents was too big a gamble. They exercised local authority and invested in the infrastructure to attract other providers for a boost to economic development, education, and quality of life.

Not The Way To Do This

If HP 1040 passes, the community will first have to meet a laundry list of requirements before they can exercise their right to invest in broadband infrastructure.

HP 1040 contains many of the same components we see in similar bills. Municipalities are only given permission to offer telecommunications services if they meet those strict requirements: geographic restrictions on service areas, strict requirements on multiple public hearings including when they will be held and what will be discussed, the content and timelines of feasibility studies, and there must be a referendum.

The bill also dictates financial requirements regarding bonding, pricing, and rate changes. Municipalities cannot receive distributions under Maine’s universal service fund.

As one of the remaining states that don’t have restrictions on local authority and one of the most rural states in the country, Maine’s towns and counties are the best poised to turn around its status as poorly connected. Inflicting rules on local communities to make the process more difficult will end investment, not encourage it.

In 2015, Rep. Norm Higgins sponsored a bill to create better connectivity through open access networks and by removing investment barriers. When we asked him about HP 1040, he said, "Competition should be encouraged and local control should not be infringed."

State Battles Can Be The Toughest

Interestingly, Wadsworth, is listed as a state chair for the American Legislative Exchange Council (ALEC) and this bill certainly complements their past work in Maine. It’s easy to see that they want to quell the success of publicly owned networks in rural states in order to prevent the solution from taking hold in more densely populated areas.

This year, similar bills were introduced in Virginia and Missouri. Missouri has seen this fight in the past and, while the bill has been quiet lately, their session isn’t over just yet so anything could happen.

Virginia was especially tough, but grassroots organizations managed to fend off restrictions that could have ended plans for several public projects and plans that included public-private partnerships.

Local Ire For HP 1040

Page Clason, Member of the Islesboro Broadband Committee, described HP 1040:

I would say this proposed bill is puzzling because while suggested to promote investment of broadband in Maine it would do the opposite.  Nothing in the bill provides stimulus, most everything in the bill provides increased hurdles and costs for communities needing the broadband investments. The only stimulus I can garner from such an approach would be that the largest providers would be further comforted that no other service providers would show up to do the builds that the dominating providers have not been supplying for the last few decades.

Check out the full text of the bill and follow its progress.

Update: Since publishing our story, the bill was referred to the Committee on Energy, Utilities and Technology.

Image of the Maine House Chambers courtesy of Maine an Encyclopedia.

HP 1040 / LD 1516 MaineTags: mainelegislationme hp 1040state lawsrockport meislesboro mealecme ld 1516