Debunking Telco Myths about Community Broadband

Tonight Longmont, CO, the community that derailed Comcast’s $300,000 effort to kill their muni broadband plans, learns some of the first details on how they may move this project forward. The consultant hired by the Longmont Power and Communications public utility presents its recommendations to city council for bringing faster, better broadband to town.

Two rather predictable things are happening that those of us following community broadband have seen many times before: 1) constituents, particularly business owners, are lining up to be subscribers way before the network is even finished; and 2) telcos are beginning a vigorous whisper campaign full of myths and distorted information about community broadband.

The former will only accelerate as launch date for the network gets closer. The myths and distortions will continue as well, so the Longmont’s broadband team is going to have to get into the thick of things with some serious myth busting. I devote a whole chapter in my new book, Building the Gigabit City, to how to effectively overcome the political adversity that most broadband projects will face at some point.

The myth of taxpayer risk

Starting tonight at their city council meeting, Longmont’s broadband champions need to brag the bull by the horns, starting with pushing back on the whisper campaign. One prevalent myth advanced by telcos and cablecos that ghostwrite anti-muni broadband laws, such as the bill recently defeated in Georgia, is that they’re protecting taxpayers. Thomasville, GA was one of the first communities in that battle to ask, “protect us from what?”

14 years ago this town wasn’t getting the Internet services they wanted. So they started their own. The profits from this and its other muni-run services were large enough enough for the town to eliminate taxes.

Examining the real track record of public- and community-run networks unravels the various myths perpetuated by the telecom giants. This myth busting reveals the community-wide value that comes when the people in the community decide to take charge if their broadband future. Furthermore, Longmont muni broadband supporters have always promoted deploying a network without putting taxpayer dollars at risk.

Santa Monica, CA owns a gigabit network. In 2008, they had a big problem with rampant vacancy rates in commercial buildings. “We offered to heavily discount the cost of installing, operating and maintaining 10-gigabit fiber infrastructure into buildings if the owners would pass that savings directly to potential tenants and aggressively market the offer,” states City CIO Jory Wolf. This amenity boosted occupancy even before the fiber installations were complete. Tax revenue has increased and building values remain high due to continual near-100% occupancy rates.

Over 340 communities own and operate cable and fiber networks. Though their stories may not be as dramatic as Thomasville’s, plenty of these networks increase tax revenues by enabling existing local companies to generate more business, and attracting lots of new companies to town. When you strip away the myth, it seems incumbents are the real threat to taxpayers.

Busting the anti-business myth

One good place for myth busting is where anti-muni network laws are made, the state capital. However, the same education needs to have with elected municipal and county representatives. As FCC Chairman Julius Genachowski stated recently, “Proposals that would tie the hands of innovative communities that want to build their own high-speed networks will slow progress to our nation’s broadband goals and will hurt economic development and job creation in those areas.”

A second myth is that the market – meaning private sector companies – eventually will take care of things if there’s a need for broadband. However, if 10,000 residents in a town are paying $60/month each for broadband services for example, those citizens actually are the broadband market. And if that market says, “we’re spending $600,000 every month (over $7 million a year) for service that sucks, so let’s instead pool our money to build our own better service,” then the true market has decided. Community broadband is the epitome of the free market system at work.

Another myth is that community networks are anti-business. These networks may by anti-big telecom, but numerous success stories prove they certainly are not anti-local business. Many of these networks aren’t even enemies of large telcos since most are open-access and their owners encourage everyone including incumbents to provide services over these networks.  Ontario County, NY’s fiber network is used by Verizon to provide backhaul capabilities its cell towers. It’s one of several public-own networks that provide services to incumbents.

In 2012, I conducted a survey in partnership with the International Economic Development Council that revealed 52% of economic development professionals believe fiber networks have a direct impact on growing local companies. 58% say these networks directly impact attracting new businesses, and 48% feel the same about broadband’s role promoting the growth of home-based businesses. Today, I presented new national survey data that further supports the pro-business nature of community broadband.

And while we’re myth busting….

One particularly innocuous sounding myth is that state and local governments should offer incentives or subsidies to get broadband providers to come to town. This actually can be a clear path to putting the screws to taxpayers. They’re just paying for a network in another way, except they have no control over pricing, location, what services are offered, etc. Once the community gives up the subsidy, it’s similar to buying a pig in a poke. If the provider doesn’t do what the community needs, there’s rarely a penalty that’s extracted. If the provider leaves town tomorrow, there’s no penalty and no service.

One of the more ludicrous myths is that local governments are unfair competition to giant telcos. Wilson, NC’s IT department of 12 people built and run the city’s gigabit network that beats Time Warner because they offer speeds Time Warner doesn’t have at affordable rates. Santa Monica’s IT Department of similar size built, market and operate a network to offer services Verizon doesn’t have. If gazillion dollar telecom giants can’t win in a market against a team of 12, maybe telcos should consider another line of business.

Public networks don’t compete on price, or by cross subsidies or a city’s power to levy or not levy taxes. Communities compete on service, and by providing extra value that big companies won’t or can’t provide. Reedsburg Utility Commission (RUC) in Wisconsin is another network that rarely competes on price. Catherine Rice, their former Marketing & Sales Director states “our marketing strength comes from RUC’s credibility. I would get on the phone sometimes with people who call in for customer service or they had a complaint. Customers remain loyal to us because they believe, rightly, that RUC has customers’ best interest at heart, and they can’t get that level of caring from companies whose customer service people are based in another country.”

Communities that want to meet the FCC’s Gigabit Challenge have a lot of work to do. Job one is setting the record straight.

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