One way to address the private utility companies' argument -- that a publicly owned utility has a natural advantage over for-profit companies -- is to change the corporate structure of the utility so that it's no longer publicly owned.
For instance, it might be converted into a for-profit company, with the city retaining a portion of the shares, or into a cooperative (as many utilities, particularly those in rural communities, are incorporated). In fact, it could even sell off its shares in times of need to finance other municipal needs.
If it's converted into a cooperative, it would become 100% member-owned, and any profits would not go to outside shareholders, as with a publicly traded company, but would instead go back to its member-owners in the form of lower costs.
The more I think about it, the more I think this is the way to go for other cities of a similar size. Clearly, Comcast/Verizon weren't very interested in laying down their own fiber there if the city beat them to it. And once a utility company (in this case, publicly owned) has an effective monopoly in a certain area, it's going to be hard for others to introduce competing infrastructure. BUT, I would think that the ability to then sell the publicly owned utility would have significant value to the municipalities.
The argument that a publicly owned utility shouldn't be allowed to do it because it has a natural advantage is ridiculous -- that's precisely the point!
Corporations exist to provide a good to society, and if a public utility would do that job better, then we should obviously be free to choose that model. It's not my job as a citizen to subsidize for-profit enterprise for the sole reason that they are for-profit enterprise!
Also, "socialized medicine" does not entail getting rid of the private sector, just regulating it. For instance, my GP runs a private practice, the only limitation is that she cannot set the price of an appointment. And if she was a hard-core free-market proponent of some kind, she could set her own prices freely, the only snag being that insurances would not cover her visits. Also, there is an argument to be made that doctors are veblen goods and that free price levels would not be optimal.
Any argument I can make here in text would only serve to make me appear to be against individuals having access to healthcare... and that is not a winnable argument (nobody looks good when they make any stand against a social issue).
The numbers I'm referring can be wide in scope. For example, the economics of providing such a socialized healthcare system are difficult to surmise, however there is a lot of data which may indicate it's not economical at a federal level (maybe at a state level, sure).
Also the numbers of citizens with interest in such a program is low, to date only 8 million US citizens have signed up for the federal/state exchanges, out of around 360 million US citizens; about 2% of the country. Only 16 of 50 states have built local Exchanges, the rest deferring to the Federal Exchange for various reasons including but not limited to the economics behind building such a portal, maintainability of such a portal, and some flat-out refused out of political, moral, or economical principal.
The current program provides almost none of the goals it set out to accomplish.
With the current program, it is still very possible to get a horrible disease such as Cancer, and leave the hospital with $60K+ in bills. The current program made almost no changes to the Pharmaceutical industry, which charges in excess of $300 per pill for some treatments when the cost-to-manufacture is known to be significant multiples less. The current program does not "provide" healthcare to anyone, it merely made it illegal to not have healthcare (with fines imposed if you refuse). The current program provides a way to get access to healthcare (via the government) if you have no other access, however it's arguably not affordable at all (the current program is estimated to cost a family of 4 around $4,000 USD per year -- and it's likely a family of 4 without healthcare might not have it because they could not afford it, nor can afford an extra $4,000 a year... but now it's illegal to not afford it).
I digress. This debate can easily turn into a flame war, and is off-topic for a thread discussing a city implementing municipal high-speed internet.
I agree that the system we have today is very bad. But it isn't socialized healthcare. We're still for the most part paying a number of private companies for our health insurance, which pretty much no other nation does.
Fully socialized health insurance makes a lot more sense than what we have now. I can't think of a single benefit of our "free market" system of insurance providers.
My personal opinion is the government should not even begin to think about implementing a socialized healthcare system until the budget issues are radically solved.
I mean, I could be a lot more healthy if I could afford that gym membership, but I'm busy buying all this beer and junk food instead. I'd have to reduce how much beer and junk food I purchase in order to afford a gym membership. The government is buying a lot of "beer and junk food" programs that make it un-economical to afford such an vast and expansive program in current-day (even though I agree healthcare expenditures are likely a much better choice to fund rather than some of the frivolous and redundant government programs).
Also, we'd need to somehow figure out how to not de-incentivize hospitals from hiring top-tier medical staff, equipment and facilities. There is a risk that if hospitals become more standardized (by means of standardized payments, etc), that it could reduce income revenue, and therefore the overall quality the hospital can afford (hospitals are businesses too). Currently, in socialized healthcare countries, the "everyday joe's" get the local healthcare treatments, while the country's elites fly out-of-country (mostly into the US) for treatments -- possibly because they perceive the treatments to be, or they are more superior to what they can get back at home (idk honestly, this should be studied more).
That's not to say we can't do it... only that our present situation may not allow it until a future time.
That was exactly my thought when I read the comment. I would be very curious to know if I'm missing something here, but it seems obvious to me that if a publicly owned company can do something better and cheaper (cheaper not only just for these people but also for the taxpayer, I don't know if that's the case here) then how is that a bad thing?
The problem isn't the ownership model after the fact, it's who underwrites the risk of the initial investment. Most of the time, when public organizations make bold investments, they're mis-pricing the risk (which is easy to do when you have someone else around to pick up the tab if things goes wrong). In Denmark, the utilities did a fiber-laying frenzy around a decade ago and the business case did not follow through and the consequence was enormous cost to electricity consumers who never had a say in the matter (OK, technically they did through politically appointed oversight at the utilities).
I think the coop model for getting fiber to the home is awesome. Nobody benefits more from laying last-mile fiber than the homeowner. But forcing neighbors to invest in the project if they're happy with the state of the art isn't really fair IMO.
I've actually been thinking quite a bit of how a provisioning and operations consultancy that would help eg. home owners associations and the like build and run a fiber network and essentially be their own local ISP. Does such a thing exist?
I would love for someone to start a company that could bring fiber to cities via the kickstarter model. Getting the money upfront from customers could go a long way toward mitigating the risk. Ideally the company would be structured as a hybrid for-profit/customer co-operative (so maybe 20% of the shares would be 10X preferred stock owned by the for-profit arm, and the other 80% of shares would be owned by the customers).
The problem with this model would be actually convincing a large majority of residents. The New Zealand Government is funding fibre to most cities and towns in New Zealand. Currently they're at 15% of their target population covered, and only 3% of those 15% are connected with UFB (ultra fast broadband) service.[1]
I should note, these fibre services are a free installation for residential use and many businesses. Monthly charges are the same price as ADSL2+ internet is here.
Well, although not exactly the same business model, this community in a rural area north of Toronto seem to have convinced a distant ISP to do a FTTH project. Homeowners pay up-front and get their deposit back as they continue their subscription.
So, I haven't done any market research, but the model I have in mind is that the network is dark fiber terminating in a carrier neutral facility to decouple the infrastructure from the service - I think this is important for financing reasons. Running fiber to the home is a pretty expensive operation and most people would need some kind of financing. In a non-decoupled scenario, that financing would come from locking in a long term provider subsidy contract, but the timescales needed (maybe 5-15 years) are way too long to commit to a single service provider. They might be awesome in the beginning, but they then deteriorate or go bankrupt or whatever and you're stuck paying for Comcast-like service for a decade.
A dark fiber, however, is a perfectly neutral medium and it's trivial to measure it's quality so you can set up meaningful SLAs (basically, like water or electricity - it's either there or not, and if it's not, it's the providers problem. OK, not quite, but it's a heck lot more clean cut than deciding whether your internet connection is too slow, why and whose responsible).
So you essentially take out a mortgage on your fraction of the dark fiber coop (my consultancy could conceivably facilitate this financing - maybe there's some local businesses or wealthy citizens that you like to underwrite the loans, but they'd still need the infrastructure to facilitate the loans and secure the collateral). You own the bit of infrastructure that only serves your house outright (if you're in a dense area, that't not much, if you have a two mile driveway, it's more) and 1/nth of the shared infrastructure, including the carrier neutral termination room. When someone buys in later, they pay for any direct cost of connecting them, and their 1/nth is distributed evenly between the existing members. If this is a community effort, you can save a lot of money digging ditches yourself (the consultancy will provide instructions on how to properly secure the cables in the ditch) and by placing the termination room in a town hall, community center, church or local business annex - ideally close to existing backbone cable runs. Obviously, bullet proof leases and contracts for access to this room would need to be in place, that's part of what I imagine the consultancy would help with.
Once you have the infrastructure in place, you need to get a provider to set up shop in the termination room. It would make a lot of sense for the consultancy to also be an ISP for this purpose. Maybe the cost of setting up could be incorporated in the initial capital of the coop, maybe the ISP will front it on back of signing maybe 1-2 year contracts for service (which is separate from and on top of the cost of the fiber), maybe it can just provide the service on the expectation of being able to do business - that would likely depend on how remote the community it. Installing optical transceivers at each end of the fiber is the responsibility of the customer and their desired ISP.
I think you raise a good point. In the UK local governments in South Yorkshire to run fibre (well, fibre to the cabinet) to ~98% of the properties in the area, costing £100m+ of taxpayer money.
It never got more than a couple of thousand subscribers out of the 1.3million people that it passed. It turned out that the large national ISPs would rather use their own infrastructure or wait for BT (the national telecom) to roll out their wholesale solution than have to have a special case for support, installs etc for such a small proportion of their userbase.
It got shut down and is now pretty much rotting in the ground.
That example doesn't apply here. The utility covered the cost by selling bonds. Municipalities use bonds to fund the building of toll roads and other long term projects without tax dollars.
I'm sure the bonds are utility company bonds so the risk point still stands. Even if the project fails financially, even if the project were to essentially bankrupt the utility and it had to be bailed out by the taxpayers, the bonds will almost certainly get paid off. I'm not saying either of these things will happen, but the point about taxpayers taking the downside risk is a good one.
Of course, internet service is a utility and so should be underwritten by the state, just like other critical infrastructure with benefits shared by all, so the point about mispricing risk--while valid--is a critique of government-run projects generally, but no more applicable here than in the building of bridges and roads.
I've seen some apartment buildings that buy a T1 line (or whatever) so they can give their tenants "free" Internet included with their rent. That's basically the same thing.
Or they could form their own internet cooperative and do wireless links between apartment buildings and a NOC somewhere in town with the actual downlink.
The equipment to do it (Ubiquiti makes some gear that appears quite nice) is getting cheaper by the year.
2: Before Comcast can buy them, someone would need to sell it. It's not clear why they'd want to sell to Comcast.
3: If they did sell, they then (by definition) have the value of a community-wide network in their pockets. They could use that to build another community-wide network to compete with Comcast (then Comcast could buy that, but...)
But more fundamentally, if Comcast had a lot of money lying around for stuff like this, they could just invest it in becoming a properly good ISP that people would actually want to be customers of.
From Comcast's perspective, it's probably easier to invest in buying a company that already exists, than to invest in building something that may or may not work. The existing company already has financials that can be evaluated, rather than estimates that may not hold once the risk is taken.
The form of investment is irrelevant, and yes, that would be a very reasonable way to invest in getting a quality network. They just don't seem all that interested in making that investment in the first place. When you buy an asset, it's not like you're not paying for the risk of building it in the first place, the risk is just firmly priced into the value of the asset.
Interesting, this. I suspect that under the currently-being-dbated TTIP, this would count as State Aid, and foreign shareholders in Comcast could sue the local government for lost profits.
The thing that is left out of the EPB conversation is the amount of federal funding they got. While it does make a good case study, what is impressive is the smaller cities that are beginning to roll it out even in states where laws ban/limit it.
For my startup broadbandnow.com we've been emailing every mayor in the US offering free statistics about coverage, fiber penetration, etc in their local area along with how they can bring faster speeds to their area.
So far the campaign is going well, we've emailed almost 300 mayors, but after countless phone calls and email changes with city officials, the disheartening reality is that most cities have 2 options to bring faster interent to their area.
1 - Install their own network
2 - Beg incumbent providers to increase their speed / coverage.
I think it's still a few years out, but I'm forecasting a huge slew of crowd funded or community backed providers entering the market to fill the gaps in coverage. (Our goal is to be a part of that movement)
Also the funding they got ($111.5 million) was from the DOE under the auspices of building out a "Smart Grid" [1]. Doubtful that a full fiber connection to the home is required for these applications.
EPB does have a very nice "smart grid" that uses fiber optic lines to connect to stations positioned all over their network that monitor the condition of the connected grid and can rapidly shut off power to a very localized area. They realized that they still had quite a large bit of bandwidth remaining, and decided to start an ISP.[1]
1- This is all based on what I recall from conversations with EPB higher-ups when I spent a day chatting with them for a school event.
Yeah. I think the folks above have it backwards. Remember that EPB stands for Electric Power Board (90% sure of this). They then knew that the logical thing to follow from providing these services was to provide the "new electricity" aka Internet connectivity.
It's not just lack of innovation. Sometimes there is innovation. It's the protection of monopolies. Comcast has been delivering me good speeds, but they're the only choice I have. That's what they want, it's the opposite of what I want.
It's not that Comcast (or whomever they're licensing technology from) isn't innovating; it's that the reason they're innovating is to avoid more expensive investments in new infrastructure.
Comcast and other major cable MSOs play a major role in the development of the DOCSIS spec. Over the next 18-24 months as DOCSIS 3.1 deployments kick up we're going to start seeing the most dramatic increase for residential broadband speeds since the late 1990s. Within about 5 years it's likely that the majority of people in this country will have access to 500Mbit-1Gbit/sec speeds via cable. It may not be as sexy or headline grabbing as FTTH build outs but it will have a much greater real world impact. It's more evolutionary in most ways than innovative but at this scale that's still quite an achievement. The same basic infrastructure that could deliver only 1.5Mbit/sec in 1997 will be able to deliver you 1Gbit/sec+ by 2017 and by 2025 10Gbit/sec will be quite common. Considering that this infrastructure is not very far removed from struggling to get a clear picture on your MTV in 1985 I think it's worthwhile to give the folks who work incredibly hard on this stuff some credit for their achievements.
The speeds they are providing me are much higher than they were. My point was that innovation isn't the important aspect of this issue, it's the protection of the monopoly. I think we'll all agree that monopolies will tend to innovate less.
The speeds may go higher, but they still are rarely what is advertised. Perhaps they should attempt utilization of advertised speeds, at this point, that would pretty much be innovation. In the U.S. at least.
I moved to Chattanooga mostly because of EPB. It's worth noting I average about 900mbps up, and 900 down. During peak hours it's about 900/750, which I find impressive.
This is wildly unimaginative. One can do lots of things with massive upload. Super high quality streaming video, over Google Hangouts or Skype, and with Twitch available on every Xbox 1 and Playstation 4. You could have a basically realtime backup system that rsyncs your entire system to a remote server nightly. You can do large asset sharing with remote team members without long download times. Software distribution via bittorrent (Blizzard has been doing this for years) could become basically instant if everyone had gigabit upload speeds.
Limited bandwidth is a really, really constraining bottleneck on innovation. It's a crime that Comcast et al get away with limiting innovation on the Internet to support their monopolies.
Like a publicly traded corporation, the utility issued bonds to raise resources to invest in the new broadband project. Similarly, just as many private corporations ended up receiving federal stimulus dollars, so did EPB, which put those monies into its new network.
This is kind of a bullshit comparison. The bonds they are talking about are bonds issued by the city of Chattanooga and backed by the revenue of the local electric utility. That isn't something a telco can do. And they are muni bonds so they receive favorable tax treatment (the interest payments on the bond are tax exempt at the federal and state level) which is reflected through lower interest rates (cheaper borrowing costs) for the issuer. So to say that, hey, the local electric utility did a thing that any old telco could do is not realistic. Also the part about receiving stimulus money is really contrived. The utility directly received DOE (Dept of Energy) moneys in a way that none of the big telcos did.
Do you understand the significance of being able to borrow against the revenue of the local electric utility? This is what that means: EPB goes to the market and says "hey guys, I need like $200M to make some internet and I can raise the electric rates of all the citizens of Chattanooga to whatever it takes in order to pay it back." There is almost no risk for the lender and if the project were to fail it would be $200M down the drain for the citizens of Chattanooga (at least all the ones that buy electricity, which is probably most of them). Why would you even need lobbyists at that point?
I'm not try to be a cheerleader for the big telcos, but I think there are valid financial reasons cities shouldn't fund these kinds of projects this way.
EPB's fiber network wasn't funded this way. Either state law or charter (can't remember which) forbade them from using electric utility revenue to build out the fiber network. They issued bonds instead under a new EPB Fiber Optics startup to finance the build-out.
The inverse is not true, however. Last year, EPB's electrical division saw a shortfall in revenue due to electricity usage being lower than anticipated. This could have actually resulted in a rate hike to EPB electrical customers, but because EPB Fiber Optics was already profitable, they were able to use fiber revenue to avert an electrical rate increase.
You are wrong. I dug out the documentation associated with the 2008 $220M issuance when I was looking at this yesterday. It is a muni bond issued by the city of Chattanooga "payable solely from the revenues of the electric system" and the project described is "to construct a fiber optic broadband network."
Isn't the same true of any telco when it goes off for a loan to cover construction costs for new infrastructure in a tiny market area? Everyone who doesn't benefit has to pay the cost if it fails in the form of higher prices across the market. It's not like you're going to stop needing a phone or cable any time soon...
Also, the (private "stay-out-of-our-business-unless-you-are-giving-us-corporate-welfare") telcos have and continue to receive billions of dollars worth of financial incentives in the form of subsidies, stimulus tax breaks, etc.
Laws may vary state to state, but in California, municipal utilities can and do lobby, and also have set up a statewide group to lobby on their behalf.
Fully staffed, CMUA has an impressive roster of professionals: experienced lobbyists, regulatory and communications specialists, and legal professionals – all experts in their fields with extensive knowledge of every aspect of California energy and water policies.
No, you don't generally don't need to invest a lot of resources to lobby yourself. (There are other politicians with power to do things than "congresscritters". In this case the relevant body would be ... the municipal owners.)
When state legislatures are passing (bought) laws barring municipalities from doing exactly this sort of thing, then no, the relevant body is not, in fact, the owners.
Actually, TN is one of the states that has passed laws against municipal broadband. From that article:
It’s illegal because Tennessee prohibits municipals from delivering both electric and internet service in any “area where a privately-held cable television operator is providing cable service.”
Workers' unions want to drive expenditure towards projects that employ the most public sector workers, not the ones with best ROI. It also drives up the cost of labor relative to private sector entities that can use non-union labor. Labor is a big part of the expenditures on an infrastructure project.
I used to live in Chattanooga, EPB was wonderful. My favorite thing about the internet service, my bill was exactly the price advertised (like 59.99). No additional fees, no extra taxes, all of that rolled into the advertised price. It's a little thing, but helped to build trust. Oh, and the download speeds were always as advertised or better.
I'm really glad to see EPB getting some good press: they not only took a really innovative step forward with their physical infrastructure, but also partnered with a local accelerator program (http://www.thegigcity.com/gigtank/) to give startups access to their expertise and grid data to help new companies in the smart grid/smart home space. This was the first year they've done so, but I expect they'll continue.
Full disclosure: we're www.gridcure.com in the smart grid track of the most recent cohort of the program (Demo Day is on the 29th. Ahh!), and can't speak more highly of the startup community in Chattanooga and the quality of work that goes on here. EPB's been a terrific pilot partner for us.
We posted at almost the exact same time. We're down here in an accelerator right now, and the quality of designers and engineers is incredible. The city is working pretty hard to put itself on the map as a place to start a company, especially on the hardware/additive manufacturing side of things.
And there's great beer everywhere, three climbing gyms walking distance from my desk, and dirt-cheap office space.
I guess the real question is then: Does allowing home/business users onto the same network that manages the electrical grid a good idea (from an OpSec point of view)? Does this make it easier to hack the electric grid? What happens to the electric grid when the network becomes congested?
One would hope they would be physically segregating the network and using different fiber strands for SCADA vs home/business users. I would be nervous even if it was logically separated using something like vlans at layer 2; you're one bad configuration change away from possibly damaging consequences.
My thought is that this digs into the idea that they 'just decided to' offer Fiber-to-the-Premises after they realized that they had built a fiber network. Or is this a non-issue (i.e. adding new strands is trivial / cheap once the infrastructure is there or maybe SOP is to just lay lots of strands, because the strands are cheap)?
Without actually knowing, either this (PowerLine), or they use the existing resources (cable pipes, wiring posts, ...) to run fiber or other wires to their customers without having to invest in digging or putting up poles.
This saves not only the construction costs, but also allow speedy installation as the time needed to get digging/building permits falls away. It's dead fast to wire an entire city area with FTTH if you already have a network of pipes for electrical wiring.
How does one even make use of >1Gbps internet in a residential setting? Do they sell 10 GigE routers for consumers? Are there any desktops or laptop out there with 10 GigE? I think the answer is no.
The fact that you can get a 1 Gbps link to the internet is amazing. This is pretty much the fastest LAN connection you can get. The difference between LAN and WAN will be gone before too long (other than latency).
Routing even 1Gbps with NAT, etc. is actually a little difficult. But you can drop a 10GigE card into your desktop and get 10Gbps for at least one machine that way.
(They seem to cost in the $500 range these days. I'd pay $500 for a 10Gbps link to the Internet. What would I do? I have no idea.)
If startups had a Chamber of Commerce equivalent, as Chattanooga's Enoch Elwall has been proposing, our community could effectively push back in a unified political voice through a local organization.
I am hopeful that this will show people why municipalities granting monopolies to phone and cable companies is a bad idea.
I've argued this for years, and many of the people who are now pro-net neutrality, in years past would argue that there needed to be these monopolies, because otherwise the infrastructure wouldn't be built, or poor people wouldn't be able to afford it, etc.
In fact, EPB is probably a local monopoly- many power companies are, though that is less the case today than in decades past.
> Yet, in an epic fight over telecommunications policy, the paradigm is now being flipped on its head, with corporate forces demanding the government squelch competition and halt the expansion of those high-quality services.
ISPs and Telecoms are amongst the industries that lobby governments the most - they are actively fighting against Free Market, so there's nothing about this which is "flipping this paradigm on its head".
When should the government enter a "private" market opportunity? I think the answer is "Only when necessary to advance the public good."
It seems people want to have one model or the other ALWAYS. But it is not that easy. We don't want firefighters being a private business because a house would burn before you can pay for the service. Or police: the service is typically needed where those with least ability to pay live.
However, it also does not follow that government should enter, say, into the haircut business or the fashion business. But the simple "threat" that it would be possible should send the message to private participants that service at reasonable cost is expected in some markets.
To the extent that access to information and communication is a necessary requirement in the Republic, then it seems to me that it is the government role to ensure this.
EDIT: I wonder at what level though. It seems that if the service is necessary, local initiatives have the least chance to be successful. Maybe this is one of those projects where states have a better chance.
My sister has this and doesn't upgrade to the 1000 service because she doesn't need it, even though it's $12 more than 100. I'm sitting here lucky if I get 11 down .5 up
I really don't understand how everyone gets so excited over publicly owned internet infrastructure. Here in Wilmington, they can't get the buses to run within 30 minutes of scheduled time. I don't even want to imagine what the municipal internet would be like. Over in Atlanta, not too far from Chattanooga, the public sewer system has major sections dating back to the reconstruction after the civil war, and dumps untreated sewage into the Chattahoochee after a big rain overflows the system. Municipal infrastructure historically is under-maintained (hard to get people to long up tax dollars for something that already kinda works). It'll be curious to see how Chattanooga keeps up with the upgrade cycle over the next decades.
Also, no company wants taxpayer-funded alternatives to their product. Its impossible to effectively compete with a public entity that can tap tax revenue. That angle doesn't really add anything to the article.
You make two arguments and they contradict one another:
1. That public internet would suck because all public projects suck (and cite examples).
2. That private companies wouldn't be able to compete with public ones.
They cannot both be true. If the public offering was as bad as you claim, private companies could compete (e.g. on quality).
So which is it? Either public companies suck and therefore private companies would be able to compete (by virtue of them sucking less presumably) OR public companies don't suck and the private companies wouldn't be able to compete.
Your whole post reads like one of those propaganda pieces put out by the far right, interest groups, or think tanks. Just generic "all public services are terrible" then switch it up into "it is unfair that companies have to compete with taxes!"
One could take the logic in your post and use it to literally argue that all public entities ever should be closed and privatised. Even things like cops, fire services, and so on could be hit by that logic. There's no limits.
It absolutely can be both. The government-run solution could be poorly managed, unreliable and overly expensive while still scaring away the massive investment needed for someone else to compete. A private for-profit business could be completely undercut by the government service which can be incredibly unprofitable but continue to operate using tax dollars.
The current telecom oligopoly is bad, but a government-run monopoly is the one thing that could be worse. Now, public money going to build last-mile fiber which is then leased to competing ISPs to create a functioning marketplace (neither corporate oligopoly nor government monopoly, but a true economics-textbook 'free market') sounds like something that could be a good use of public money & power.
Theoretically, there is no reason for a government-run utility to be worse. There should be democratic pressure to improve service, balanced by democratic pressure to cut costs. Despite what ideologues say, there are many examples of well-run government-run programs, such as NOAA, CDC, NIH, interstate highways, FDIC.
Take NOAA vs Weather.com as an example. One employs hundreds of scientists and engineers to improve their forecasting models and early alert systems. The other employs hundreds of engineers to improve ad-clicks and increase profit margins.
> They cannot both be true. If the public offering was as bad as you claim, private companies could compete (e.g. on quality).
Unless those private companies are legally prohibited from competing, or are prohibited from practically competing by things like red tape or fees for constructing infrastructure.
Alternatively, it's usually possible to heap tax money on the inefficient government option to allow it to have an incredibly low "sticker price" because they charge everyone for the service whether or not they use the service through taxes. Essentially making it so you buy the inefficient services either way, and if you want you can pay a bunch more to use a private competitor.
And yet, my roads, police and fire services, and municipal maintenance services work very well.
Just as with the private sector, you'll be able to find public initiatives that aren't reaching their goals, or are outright failures. Should they not be permitted to compete against the private sector when the private sector chooses not to serve a certain unprofitable market segment? If you're that good at providing services, why as a private business are you worried about competing with an "incompetent" (as you may argue) public sector initiative?
Full Disclosure: I fully support municipal broadband, and want a stake driven through Comcast's heart.
> And yet, my roads, police and fire services, and municipal maintenance services work very well.
For varying definitions of 'very well.' Public services are good at delivering a minimum level of service to everyone. Everyone will get water and sewer service. That water might not be particularly clean, and the sewers might dump untreated sewage into the environment, but everyone will get it. The problem for you in this narrative is that you're the yuppie who would be happy to have a higher water bill in order to have cleaner rivers: you're not going to get your way.
Chattanooga was able to piggy-back this on the fiber network put in place for smart grid. What happens in 10 years when that network becomes obsolete? Your neighbors will have to vote to fund upgrades. Will they do that? 60% of people who have access to FiOS do not subscribe. When those same people vote on whether to raise their utility bill to fund upgrades, do you think you'll be happy with the result?
You sound unhappy with Comcast, but the fact is that they pump enormous amounts of capital into their network, while municipalities are famous for letting their infrastructure rot.[1]
I'm not opposed to public services. The question is: will municipal internet be more like NYC's transit system, or more like the ones everywhere else?
Indeed [1]: not only Davis Polk & Wardwell happens to "routinely represent Comcast in antitrust aspects and related investigations" [2]; but also he interned for FCC commissioner Meredith Attwell Baker, who was widely criticized for her blatant pro-Comcast decisions --only to be hired afterwards as a Comcast lobbyist herself) [3].
People keep pointing out "But Google can build gigabit! Why can't Comcast?"
Who he worked for previously doesn't really change the fact that he has pointed out repeatedly that Google Fiber is getting breaks to only build out to rich neighborhoods vs. Comcast having to build out to an entire city, even sections of town which will lose them money.
> You sound unhappy with Comcast, but the fact is that they pump enormous amounts of capital into their network, while municipalities are famous for letting their infrastructure rot.[1]
Correct me if I'm wrong, but Comcast's profitability is over $1 billion a year.
Should my electric company be able to profit at that level? Because they're much more reliable than Comcast, and they're a regulated monopoly that needs to report to the PUC (Public Utilities Commission).
Have we determined yet if Internet access is a utility such as phone service, electricity, water, and natural gas service? If it is, isn't it time last-mile delivery is regulated as such? (Which leaves Comcast in a precarious position as a last-mile provider)
Also, I'm not unhappy with Comcast because of my service. I'm unhappy because of their efforts to prevent municipal broadband. They are the Koch Brothers of the Internet, and are attempting to squeeze whomever they can for access only they provide in a great deal of markets to a tool that is the foundation of the 21st century.
TL;DR Regulate last mile delivery as a utility, politely ask rent-seekers like Comcast to leave.
Excelon, the power company in Illinois, has profits of $2.5 billion on $18 billion of revenue. Comcast, which covers a much larger footprint, has profits of $6.8 billion on $64 billion in revenue. Excelon's profit margin is larger.
I don't think the "internet = electricity" analogies are very good. The regulated part of the electric monopoly (e.g. ComEd in Illinois) just has to maintain wires built decades ago. If internet infrastructure were the sort of thing we could bury in the ground for 50 years and forget about, that might work. But stuff that was state of the art in the 1990's is obsolete now. There is no public infrastructure that turns over that fast.
You didn't respond to my point about politicizing investment decisions. Utility investment decisions are intensely political, and voters don't care about better technology, they just want cheap rates. Its a huge battle for most utilities to raise the money they need to upgrade the network, or even just maintain it properly. If you think Comcast is slow to upgrade its network, what do you make of utility companies that are operating coal plants that are literally a century old? The fact that public utility regulation has left us $3.6 trillion underfunded is totally ignored by proponents of municipal internet service.
> You didn't respond to my point about politicizing investment decisions. Utility investment decisions are intensely political, and voters don't care about better technology, they just want cheap rates. Its a huge battle for most utilities to raise the money they need to upgrade the network, or even just maintain it properly. If you think Comcast is slow to upgrade its network, what do you make of utility companies that are operating coal plants that are literally a century old? The fact that public utility regulation has left us $3.6 trillion underfunded is totally ignored by proponents of municipal internet service.
Electric utilities cover large areas. You use Excelon as an example, who delivers my power in Northern Illinois. As you say "..[they] just has to maintain wires built decades ago." It's not just wires. Its transmission facilities all the way from 700kVa down to the 120V step down in your neighborhood, even to your service entrance.
Internet access is no different. You trench fiber in the ground, you drop equipment cabinets on the curb, and you pull your plant to your CO for interconnection to your routing/switching gear (although sometimes this gear is distributed across the plant instead of at the CO; depends on size/network topology).
My municipality or coop not upgrading fast enough or providing the service I want? I argue I have more leverage in that case as a share/stakeholder. With Comcast, they're out for the shareholder, not me.
As I've said elsewhere, almost all other utilities have functioned well in a regulatory, profit-restricted environment. Why not last-mile packet delivery?
Yes, but again, those facilities don't have to be upgraded t anywhere near the rate telecom infrastructure does. Look at his long its taking to deploy Smart Grid. Is it practical to run telecom infrastructure in a way where upgrades require a decades long political process? I think you're wrong about having a better shot convincing upgrades as a voter than as a Comcast customer. Comcast at least sees the value in offering certain customers high end service for a high price. There is no such thing in the utility world. Everything is geared to the lowest common denominator, because 51% carries the vote. Your other voters are people like my mom, who wanted to cancel FiOS in favor of cable because she wanted Indian channels.
As for utilities having functioned well: you keep ignoring the $3.6 trillion U.S. Society of Civil Engineers number.
"In fact, Comcast and TWC’s Internet service businesses were the only two businesses in the United States to score below a 60 on the ACSI’s 100-point scale. What’s most amazing is that both Comcast and TWC have even lower customer satisfaction ratings than United Airlines, which has a notoriously bad reputation in an industry that, due in part to government security requirements, is known for delivering a miserable experience."
I don't know what that really proves. Nobody polls people for satisfaction with their municipal rate boards.
Again, the proof is in the pudding. We have underinvested in our infrastructure to the tune of $3.6 trillion. Our bridges are crumbling, our transit systems haven't been expanded in decades, our sewer systems are polluting the environment because nobody wants to spend the money to bring them in compliance with environmental laws, and yet you posit that public utilities work "very well" and assert that they should get involved in an area where technology moves 10x as fast as the areas in which they already lag behind. I just don't see how you get from point A to point B here.
Let's not forget the big elephant in the room too. The states haee no money. When Illinois is deciding between defaulting on its debt and giving a haircut to public employee pensions, where do you think spending money keeping up with telecom infrastructure upgrades is going to fall in the list of priorities?
> The question is: will municipal internet be more like NYC's transit system, or more like the ones everywhere else?
It's funny that you use this as a point of comparison. The NYC subway system began as three competing private companies.
Long story short: They went broke, and were acquired by the city in 1940 (and then later by the state, which now has authority over the MTA).
While they were originally constructed as private subway systems, I firmly believe that it would be impossible for NYC to function the way it does now if its public transit system were privately run.
That's not to say I'm a fan of the way the MTA is regulated. I follow this issue closely and have a lot of opinions on the matter. There are a number of ways in which the state government cripples it. But it's still significantly better than it would be if the Interborough Rapid Transit were still running the numbered lines.
> Long story short: They went broke, and were acquired by the city in 1940
Not quite as simple as that, the city had been deeply involved for decades prior to them finally taken over completely, and the city effort was itself deeply indebted.
Anyway, I'm pretty sure the GP emphasized the MTA as a (rare) example of public infrastructure that's actually run to the high standard we'd want our internet infrastructure to be run at.
That's not quite accurate. There are three NYC subway systems: the IRT, the BRT, and the IND. Some of the BRT was built privately. Most was designed and built by the city and leased to the BRT for operation. All of the IRT was built and operated that way. The IND was built and operated by the city. See: http://en.m.wikipedia.org/wiki/History_of_the_New_York_City_...
That is the big danger of municipal broadband. The town I live in frequently votes down budgets that only increase spending on education by just a few hundred thousand dollars. Anyone who thinks those same folks will be voting spend more to make your NetFlix circa 2020 work better have to be incredibly naive.
There's no inherent problem with publicly funded services, but they're only as good as the public body that runs them. If you're in a well-run city/county that's great, if you're in a dysfunctional one then not so much.
I wouldn't have much confidence if my place of residence (Oakland CA) set up muni broadband, for example, although I'd like to be proved wrong. Large parts of the city government are painfully inefficient.
> There's no inherent problem with publicly funded services
The scale of the problem isn't clear, but I would argue that the economic calculation problem is certainly an inherent problem with publicly funded services.
> And yet, my roads, police and fire services, and municipal maintenance services work very well.
Do they really though? Road infrastructure (especially bridges) is widely recognized to be really bad in the USA. It's hard to say how well police work without comparing it to something else, but just based on the US prison population I would say that police don't work well. Fire and maintenance services might work reasonably well, but I bet both are shockingly expensive.
> Do they really though? Road infrastructure (especially bridges) is widely recognized to be really bad in the USA.
This is due to Republicans in Congress blocking an increase on the gas tax, currently at ~18 cents/gallon of gas since 1993.
> It's hard to say how well police work without comparing it to something else, but just based on the US prison population I would say that police don't work well.
I'm not a huge fan of police myself, but I believe this problem to be with laws enacted by legislative bodies. I believe you'll see less arrests as drug arrests drop due to decriminalization/legalization of recreational drugs across the US.
> Fire and maintenance services might work reasonably well, but I bet both are shockingly extremely expensive.
Citation? My property tax bill for my municipality (~75K people) shows public safety costing ~$48 million/year and highways and streets cost ~$14 million/year. I don't believe those costs to be out of line for the amount of people covered.
> This is due to Republicans in Congress blocking an increase on the gas tax, currently at ~18 cents/gallon of gas since 1993.
Is it, though? Only 60% - 65% of the gas tax is spent on roads and highways [1] [2]. Not to mention (possibly ultimately justified, but still relevant) drivers of extra cost like the Davis-Bacon Act.
> Your demagoguery does not hold up to the fact that Democrats recently held a majority in both houses of congress
Your argument fails to take into account that, due to the filibuster, legislation can be blocked by one party (with no support from the other party) so long as the opposing party doesn't have both a majority in the House and a filibuster-proof supermajority in the Senate.
The idea is that they're now in power and if it were such a good idea, they should have implemented it now that they could get it passed.
If it's not such a good idea then perhaps it was only done as a publicity stunt, and that would explain why it hasn't come up again.
I don't know that I care much one way or the other. But saying "Democrats haven't voted it down" is actually different than "Democrats have made it a priority"
Pointing out that there are hypocrites in the Democratic party too gets downvotes? Really? I'm not saying that I like the Republicans, they're hypocrites also.
But the Dems do get campaign contributions from Oil & Gas companies. Only at 20% of the rate of folks in the GOP but it's not as though it's a 99/1 split.
I missed that in your argument. I would still challenge that claim, especially when it comes to roads, which get a ton of funding from higher level governments and are still pretty bad.
Are you not proving the point? Saying that government-run projects are limited because of the decisions of the government doesn't seem to be a great argument for government-run projects.
I thought I was proving that local governance works, whereas federal governance does not as much. Its much easier to effect change at the local level than the federal, hence "municipal broadband" and not "federal broadband".
As a fire/medic in Western Washington, fire district rates are capped at $1.50 per $1,000 of assessed property value, and are typically less (changes need to be voted but cannot exceed this, regardless).
A semi-rural department with three fire engines, ambulance, brush trucks, serving an area of 7,000 people and approximately ~1,000 calls a year does so with expenditure of ~$1M for those 7,000 residents.
> A semi-rural department with three fire engines, ambulance, brush trucks, serving an area of 7,000 people and approximately ~1,000 calls a year does so with expenditure of ~$1M for those 7,000 residents.
What's the breakdown of your calls? Car accidents? Health problems?
I'm in Chattanooga and I love it. Their customer service is great and they've upgraded me from 50mbps to 100mbps, then again from 100mbps to 1000mbps for the same monthly price. I just get emails that say "We've upgraded your internet speed!" I like a free market too, but it's too late to keep the government out of the competition. They ended that game when they allowed providers to lay claim to large areas free of direct competition.
I'm here too; EPB is amazing. I cut cable about 6 months ago (kept 100mbps), yet they were still awesome from a customer service perspective.
There is a lot of talk in the thread about public vs private - regardless of ideology - EPB is an incredibly run public utility (as least as a customer)
I did the same; I stopped by their office on the way to work with my cable boxes. While standing in the customer service line held up by a problematic customer, a woman took me aside to her cubicle nearby where she had me sit down as I turned everything in and changed my account. Very friendly, no pressure to keep anything. She just made the changes and helped me save some time. Much different at Comcast, where I was treated like an animal.
The US is in the peculiar situation where a large portion of the population has been convinced that government cannot be competent and thus shouldn't be expected to be.
Meanwhile, in much of the developed world, people are shocked when a train is a minute late.
Exactly, and for some reason people who make these sort of claims are unable to comprehend the fact that there may be a connection between believing/acting/voting as if government doesn't work and then having underfunded government projects fail hard.
How does one calculate whether a government project is "underfunded?" It seems easy to fall into the trap that a government project is underfunded if it did not meet the expected results. Clearly the solution must be to add more money.
Take public schools, for example. It is often said that public schools are "underfunded." Yet Washington DC schools spend almost 3x the national average per student and has abysmal results.
I'd call it the depressing situation, personally. I wish I could carve out a small corner of the US sometimes where people don't actively sabotage the ability of government to function effectively.
I think someone hits on this in a different thread, but there are forms of incorporating these sorts of utilities that avoid most of the difficulty of maintenance, etc. For example, in the recent multi-week power outage a few years ago here in CT, the best response came from the municipally owned power company serving the Norwich area [1]. It's not impossible to do this.
Also, there are better ways to look at how to fund these. For example, having municipalities own the wiring only, and let ISPs pay to have access to the homes (similar to how telecom or power systems work now, e.g. different charge for distribution). I would love more choices of providers, honestly, and with fiber, there are better options for managing traffic at the neighborhood and local level.
It's not really mentioned in this article but EPB owns the fiber and EPB Fiber Optics which delivers the broadband service pays a fee to them to use the infrastructure. What would be interesting is if EPB opened the infrastructure up for other providers to use and compete for customers.
Well, given that it's a natural monopoly, the private sector probably isn't going to do much better with it. The natural inclination will be for a private business to demand ever-increasing rents to feed their shareholders' desire for profits and growth. Public investment can make longer-term investments that retail investors don't have the stomach for, and it's not like the private sector is utterly incapable of waste and mismanagement.
Here in Wilmington, they can't get the buses to run within 30 minutes of scheduled time. I don't even want to imagine what the municipal internet would be like.
Saw this elsewhere today. Speedtest result from Chattanooga:
Water, electricity and sewer are stellar examples of things that fade into the background and are often run by highly regulated public entities. I would love for my internet to be as reliable as my power.
In Wilmington, which the parent comment mentioned, the power is run by Duke Energy.
The water & sewer is public, and is subject to frequent breaks and spillages as a result of how outdated the infrastructure is.
Nothing would guarantee that a private coorporation would somehow magically upgrade the water and sewer system. Since they are profit based they would probably just do the minimum required by law. The only thing that could possibly work, would be that the infrastructure is still owned by the city and it awards operation contracts every 10 or so years.
> Over in Atlanta, not too far from Chattanooga, the public sewer system has major sections dating back to the reconstruction after the civil war, and dumps untreated sewage into the Chattahoochee after a big rain overflows the system.
Wow. Just wow. You do know that Atlanta privatized its water, right? The private company, United Water, failed to deliver on it's contract. The city took over water duties again after finding fraudulent billing and lower water quality delivered by United Water. Since the city took over in 2004, they've reduced sewage overflows by 97-99%.
That's a really terrible example to use for your argument.
Common carrier has worked out for other utilities in the past. Publicly owned infrastructure is the next step.
You can view it as simply as, developing a single distribution network and subscribing to Comcast/AT&T/etc at your discretion over that common distribution network saves everyone money, because the city has only one distribution network rather than several cable networks, DSL, satellite, etc. It additionally could encourage competition among service providers, as incumbents would not need to develop their own distribution network.
One reason I'm excited about it is because it introduces some form of competition in a market that currently doesn't have any. As long as municipal broadband isn't the only option, they will have to provide better service than the existing companies in order to attract and keep business.
Also, the existing infrastructure was built with tax money and heavy tax breaks as well. Local governments won't really be at an advantage for having those levers to pull.
Well then, let's answer that question in a few decades. Nothing is keeping private companies from building out infrastructure and competing, either now or in the future when the municipalities become sluggish without recourse.
However, let's ask that same question about "privately" owned Internet. To have an actual market, there must be more than a single provider. Which means the overwhelming majority of places have been stuck at DSL for over a decade!
It's really just a testament to how terrible the private ISPs are. At least with public internet there is a theoretical way to set certain standard, whereas with the ISPs' de-facto monopolies and huge capex barrier to entry we know they have zero incentive to ever improve service.
Ultimately what it boils down to is that many people (including myself) want something other than the current status quo for internet service, which is a fucking travesty in most of the US in terms of price for (poor) service.
If the solution comes from the private sector, the public sector, or rainbow unicorn fairies is a secondary concern. But the current system is clearly not the answer, which is why I can't read about the home Internet options available to people in most of the world (with a few other exceptions like Canada and Australia) without nearly breaking down and crying.
While this might be true of a lot of entities, it's worth noting that EPB has amazing customer service. I can't scream enough about how great they are.
That might not prove true for a lot of entities though, but EPB is great. They're likely one of the few well run power companies though, I've heard lots of horror stories elsewhere.
One of the reasons that corporations are so firmly on the "cut-taxes" bandwagon is because it allows them to make your argument: that government-run projects are awful. Of course one of the reason some of them are awful is because they are underfunded, and because there are all these conservative politicians that don't want government projects to be successful so they make sure they're not.
The obvious answer to complaints is to open the network up for wholesale and force the utility company that built it to sell access to it's retail arm for at least the same price as it's charging others.
For instance, it might be converted into a for-profit company, with the city retaining a portion of the shares, or into a cooperative (as many utilities, particularly those in rural communities, are incorporated). In fact, it could even sell off its shares in times of need to finance other municipal needs.
If it's converted into a cooperative, it would become 100% member-owned, and any profits would not go to outside shareholders, as with a publicly traded company, but would instead go back to its member-owners in the form of lower costs.
The more I think about it, the more I think this is the way to go for other cities of a similar size. Clearly, Comcast/Verizon weren't very interested in laying down their own fiber there if the city beat them to it. And once a utility company (in this case, publicly owned) has an effective monopoly in a certain area, it's going to be hard for others to introduce competing infrastructure. BUT, I would think that the ability to then sell the publicly owned utility would have significant value to the municipalities.