I was surprised to see Verizon outside my house, last week. They were installing fiber for FIOS service. I knew some suburbs were getting wired. But I didn't expect we would get wired for approximately another year. Whats more, I was told Syracuse is mostly wired up, already.
Thinking about how Verizon FIOS might affect the business and political landscape for a municipal broadband network, I posed myself the following questions:
- Do we need to create a municipal FTTH network if Verizon is creating one? My conclusion is . . . . . Absolutely. The purpose of a municipal network is to establish public control of our major broadband infrastructure and services, lower prices, universal access, funding for public access and local programming, and state-of-the-art service and convenience to stimulate the city's economic and cultural development. Whereas the goal of a municipal network is to maximize public benefit, the goal of a private company is to maximize it's profits;
- Won't it be difficult for the municipal service to compete with Verizon FIOS, given the technology will be the same? I would say, no more than for Verizon FIOS to compete with the municipal service. Verizon will hate operating in a market where the competition's mission is to minimize prices and maximize service. It can't profit (or only barely so). Worst for Verizon is that, assuming equal prices, the vast majority of residents will choose municipal service over Verizon, knowing that a large percentage of their fees will flow to the community for greater public access and local programming support, as opposed to profits to Verizon.
- Won't competition between Verizon and Time Warner Cable bring prices down? Probably, but less than one might think. In markets where there are two or more major providers, prices are only slightly lower (roughly 0% to 10%). Municipal service would lower prices 30% or more, offer more generous service, and provide millions of dollars more for public access and support.
- Won't Verizon and Time Warner Cable attempt all kinds of legal challenges and political influence to derail the initiative? Most likely. That's what they've attempted elsewhere. We will have to budget legal expenses and project delays in our plans.
- Won't Verizon attempt to derail the project by "dumping" their service (selling below cost) for a while in the hope of bankrupting the municipal service before it gets going? Maybe. That has been tried before. We must have sufficient and reliable financing to survive such tactics. Revenue bonds should do the trick.
There are also positives we can look forward to. Time Warner Cable and Verizon will likely attack and bad-mouth each other, making each other look bad without our help. We will be technologically equally or better positioned than our competitors, and will offer more generous services. We will have the loyalty and all-around benefits advantage: The municipal service is us; we are paying us; and we will maximize the benefits to us.