Great quote from a resident (in a press release linked from the OP):
“Our family has lived in Goshen for almost 30 years. Over that time during town meeting, we’ve debated the costs of a fire truck, an ambulance, several highway trucks and police cruisers, capping our dump, a new elementary school, an addition to the high school and now the construction of a regional broadband network. Never [before] in the history of Goshen have we had to change the venue of the meeting because so many people turned out.” All 240 voters were unanimous in their support of the bond authorization.
Cities in NC did this[1]. TWC didn't like it, so they bought the state legislature and had it made illegal[2]. The FCC is trying to pull rank on NC, but NC is fighting back[3].
Well TWC had their original monopoly granted by the government, so pretty natural they would look there to defend it.
I don't defend big ISP monopolies. But my concern with municipal broadband is that municipalities generally do a bad job running what should be private sector services. They end up being used for patronage jobs and other political shenanigans among other things. Plus your average elected city councilman doesn't know the first thing about the technical or financial realities of running an ISP. It's more like "hey we can pass a tax levy and take some money from each citizen to build a Cadillac internet service with no concern for profit or cost." It's thinking like this that had my town buying acres of land for a "tech park" that has sat undeveloped for years, and working plans for a waste materials separation facility that no private waste hauler will build because it's a guaranteed money-loser.
I wish I had more choice in ISPs. But I don't think my neighbor should be forced to pay for my internet service.
On the other hand, municipalities generally run water and sewage services without complaints; incompetence and corruption in that department are so rare that they are news.
You can privatize bus or trash service and hand the concession to someone else should the incumbent be too awful at their job, but things like water, sewage and data are natural monopolies, and for these different rules apply.
The sad thing is that we know how regulated utilities ought to be run, but we choose not to. Hence Comcast and the Enron-sponsored electricity shenanigans in CA.
The American Association of Civil Engineers estimates a multi-trillion backlog in municipal infrastructure investment. Sewage and water systems around the country are more likely to be out of compliance with water quality or environmental standards that not. They have lead pipes and dump raw sewage into rivers when it rains. They have no money to come into compliance because it's politically untenable to raise water and sewer rates.
> municipalities generally run water and sewage services without complaints
I'd largely agree with this from my own experience. The caveat here in comparing water & sewage to internet service is that water and sewage service - at least what we experience as end users - hasn't changed much over the years. Municipal governments are good at managing that type of service. I'm happy with the same water and sewage service that I had 15 years ago. Not sure I'd like the same Internet service. And I'm not so sure I'd trust my city to keep such a service up to date.
I'm not so sure I'd trust my city to
keep such a service up to date.
If the private sector is doing a great job at keeping your internet connection up to date, I'm glad for you!
Unfortunately some Americans don't seem very happy with the level of service the market is providing [1] - IMHO if people are attending meetings and voting in favour of municipal broadband, it indicates the private sector isn't doing a very good job of keeping services up to date either!
You don't want the municipality to provide you with Internet service. You want them to provide you with fiber service. Then they let you pick a private actor to provide you with services over that fiber (internet, voip, iptv, etc). That's how the system was where I lived in Sweden and it worked great.
The fiber network was built and maintained by the local municipality-owned power company who knows a thing or two about running grids (and already had conduits running all over the place)
Water and sewage have changed a lot over the years. Sure, you maybe can ignore it, but most cities regularly have to expand capacity and change technologies.
The type of waste going down the toilet has changed tremendously during the 20th century. As a couple of examples, pharmaceuticals and tampons frequently go down the toilet now (even if people are told not to flush them).
Additionally, acceptance of dumping raw sewage or overflows into waterways has hugely changed. I know many people who would roll up their windows when driving over the Potomac in DC. In Boston, the Harbor was absolutely atrocious and smelled for decades.
Together, these two factors have led to large amounts of research into sewage treatment, new technologies, and upgrades nationwide. Just because you apparently are ignorant of them doesn't mean they haven't been occurring.
The pace over the last 15 years has probably been slower, but if you look at the 1970's and 1980's following the passage of the Clean Water Act, upgrades of these systems were occurring on as large a scale as ISP upgrades. In fact, they probably were larger in total cost.
> Together, these two factors have led to large amounts of research into sewage treatment, new technologies, and upgrades nationwide. Just because you apparently are ignorant of them doesn't mean they haven't been occurring.
While admittedly ignorant of the specific changes in water and sewage provision, I never suggested they weren't occurring - I said the experience for an end user hasn't really changed much. Even if the water quality has increased tenfold and a city's demand trebled in a decade, we're still pulling water from the tap the same way we were before, and our usage year over year doesn't change that much (on a household basis). My household needs and expectations for water service don't seem any different than 15 years ago, whereas my household needs and expectations for internet service are radically different. Governments do 'big' better than 'fast'.
There was a fairly heady construction boom in the last decade, let me remind you of that. That said, everyone seems to have a beef with Comcast, while the complaints about the Vermont muni ISPs and the only muni ISP in North Carolina (http://www.greenlightnc.com/) are muted.
Municipalities everywhere have had to deal with increased water usage and yes, sewage. I was just reading a news article from my former hometown about the original choices and changes of water sources and the build-up and upgrading of water towers as the town grew. Back in the early 1900's, water infrastructure WAS high-tech.
My town fired the city chemist because he wasn't actually doing the water quality tests.
And I view sanitary drinking water as a public health obligation. Internet service isn't even in that ballpark for me. It's a convenience, and one that people should be able to choose to pay for, or not.
The alternative view is that nowadays the internet is part of the infrastructure, and individuals don't get to opt out. Same thing as with the municipal pool.
There were a bunch of folks who died in Ontario, Canada when the water service failed to adequately treat the water. It was a patronage appointment and they (two brothers) knew nothing about water quality.
It started as a luxury, but it's starting to become a requirement, and you can start doing more interesting things in government once you're able to assume that everyone has access to it (just as government was able to do more interesting things once it could assume that the postal system reached everyone).
Massachusetts has a long history of municipal power companies; along with schools, fire, police, water and sewer 41 towns also own and run the electric grid. Their association claims 24% lower distribution costs then investor owned utilities. Here is a map of who supplies power in each Massachusetts town:
I'm not aware of any place at all on Nash, Ward, 264, Airport, or Forest Hills with Greenlight. If you know someone who has it, I'd love to know where.
"Wilson's muni broadband success story" is a fairy tale kept alive by credulous reporting.
Several cities in northern Utah did it as well [0]. I'm not aware of any legal issues they've had; the main issues they've had have been financial issues and rollout delays.
With each new community that succeeds, that's one more example we can point to in our own communities.
At one point the local DSL and cable monopolies used lawsuits to prevent federal funding from being distributed to UTOPIA, which contributed to the financial issues, IIRC.
$80 million for an area that has 20,000 households. If they get 40% uptake, that's $10,000 per household. TWC's market cap per subscriber is less than half that. The economics of building fiber suck.
Laying water pipes is expensive.. but water pipes are good for what, 80 years? The cost spread out through bonds over a long period is not that bad.
The trick is how long is gigabit "good" internet for? In 2001, they could have built a 1mbit connection to every house and been seen as pretty awesome, but now, 15 years later, it would be pretty worthless.
Though I am not a fiber expert, I think there may be ways to future proof it so current 1gbit fiber could be 10gbit or 100gbit down the road with better back office equipment..
In my mental model, it's laying the conduit that is expensive (but the collective clearly has an edge over a traditional vendor because they presumably don't have to get permits from the towns), followed by the cost of the actual fiber and/or equipment. But hopefully once that conduit is in place, if Super Awesome Fiber 2.0 comes along, they are one small remote controlled fiber-pulling device away from stringing the updated medium through said conduit.
I am purposefully not even addressing the multiplicative power of multi-modal fiber connections, or any such in-medium improvements.
When ISPs get federal money to lay fiber they will never lay conduit because then they would not get money again when "Super Awesome Fiber 2.0" comes around.
Installing conduit and pulling the fiber is about three times more expensive than just doing direct burial fiber. In rural areas it can be more cost effective to just do direct burial fiber.
Fiber strands are also quite cheap. It is often faster, cheaper and easier to direct bury a fiber cable with "enough" fiber strands to cater for current and any forseeable demand than to install a condiit system in rural areas.
Furthermore it is quite rare to replace the fiber in a last mile network. I can't recall a single instance since single mode fiber was introduced. It just isn't cost effective. It's much easier, cheaper and faster to just change the electronics/optics.
Even adding more fiber strands by means of a new cable is rare. Again it just isn't cost effective. It's much easier, cheaper and faster to just change the electronics/optics. Even so, in rural areas it is just cheaper to plow down another cable than to build a conduit network.
In summary, a conduit system is more expensive to install, repair and maintain than a direct burial network. Aerial systems are generally even cheaper, but have their own downsides.
A direct burial network might not be as flexible and easily upgradeable as a conduit system, but sometimes this does not matter, especially if you are on a fixed budget.
> Installing conduit and pulling the fiber is about three times more expensive than just doing direct burial fiber. In rural areas it can be more cost effective to just do direct burial fiber.
You caught me only thinking of "town" as town and not the entirety. So in that way, I 100% agree with you that pulling pipes out to Farmer Bob's house is not a good use of capital or time.
However, while I was considering the mistake I made, it also seems that burying the fiber isn't a good use of capital for almost the same reason. I would bet that these rural areas have power and phone (maybe even cable, too) provisioned via poles and thus stringing the fiber along the poles would be the approach I would take, barring some fantastic reason why that wouldn't work [copper handles high winds better? icing? who knows].
> However, while I was considering the mistake I made, it also seems that burying the fiber isn't a good use of capital for almost the same reason. I would bet that these rural areas have power and phone (maybe even cable, too) provisioned via poles and thus stringing the fiber along the poles would be the approach I would take,
Well, as they say, it depends. Purely on it's own aerial fiber is often cheaper than buried fiber to install. However the aerial plant is more exposed (both in good and bad), so lifetime costs depend on the location. The biggest issue is however access to poles and specifically at what cost. Pole fees and make ready work can easily push costs above direct burial costs, if there are no land usage fees and you can bury the fiber by plowing.
> barring some fantastic reason why that wouldn't work [copper handles high winds better? icing? who knows].
No need to go all fancy. Just think of shotguns, squirrels and termites.
"Installing conduit and pulling the fiber is about three times more expensive than just doing direct burial fiber. In rural areas it can be more cost effective to just do direct burial fiber."
True, but everyone also fights the laws around making sure the same ground doesn't get torn up again and again.
Where I lived in Maryland (which installed FIOS, then comcast upgrades, then a municipal broadband network), they literally tore up the same streets 3 times in a year and a half.
This is why it's so expensive.
But nobody wants to have to subsidize anyone else when they do work, so they fight regulations around burying extra/empty conduit tooth and nail.
> But nobody wants to have to subsidize anyone else when they
> do work, so they fight regulations around burying
> extra/empty conduit tooth and nail.
The funny thing is that sharing dig costs would not result in a subsidy for anyone. It would actually save costs for all parties, but competition being what it is, large players would rather take the full cost hit than allow a potential competitor to also lower their costs. Barrier of entry and all that.
The EU is actually about to mandate shared digging to solve this problem.
If your crossing pavement, it makes since to add conduit. It also makes since for cities to require anyone tearing the concrete/pavement up to allow other companies to lay conduit at the same time- it doesn't cost anything extra to the company doing the tearing up to let others install conduit into the same trench. (Perhaps a bit of time, but the time they are alloted to get their extra conduit in should be minimal.)
> If your crossing pavement, it makes since to add conduit.
Yes, of course. I'm not advocating direct burial in all circumstances, just that it should be considered on it's own merits in rural deployments. Likewise one should not always build a full conduit system.
"It also makes since for cities to require anyone tearing the concrete/pavement up to allow other companies to lay conduit at the same time- it doesn't cost anything extra to the company doing the tearing up to let others install conduit into the same trench."
It always takes a bit of time, effort and planning. Subcontractors also want to be paid for any extra work, so there is always the question of who will carry that cost.
There are a lot of models for sharing digging costs, from simple co-dig projects to full scale infrastructure sharing efforts as in Stockholm.
Hey fiberrun, I have been doing a lot of research on rural fiber networks for my community- I'd love to chat with someone with more experience in this area, if you (or anyone else reading this) is willing to reach out to me, check my profile for contact info!
I cited market cap, not yearly revenue. Market cap per customer is a good estimate of the value of each customers subscription projected indefinitely forward into the future.
The fiber would hold up, it's the equipment that would need upgraded. Since 2001 the cable lines coming into my house have went from 3mb to 100mb on the same lines
$80 million for 20,000 households is about $4,000 per household. Let's call it $10,000 per household like the other guy, assuming most people won't be interested.
Let's estimate that about $60 million of the cost is the actual build out of fiber, and $20 million is other expenses. If we're going to upgrade our backend equipment every 3 years over a 20 year life span on the fiber, we're talking about another $100 million on top of our $80 million investment. So we could have constantly upgrading backroom fiber laid down on a 20 year infrastructure cycle for $180 million, or about $22,500 per household (over 20 years).
So the cost per household to lay down fiber, even if only 40% of the households are paying, is about $100/mo per household for 20 years.
Given that we need to pay bond interest rates and cut some money in for the company managing your ISP account on the fiber, we're talking more like $130/mo, maybe $150/mo.
So in short, if $130/mo-$150/mo for 1gig internet with open ISP competition instead of getting dicked by Comcast all the time sounds good, talk to your local government.
40% is an incredibly high uptake ratio. Google is not hitting that in Kansas City with gigabit at $70. And the higher the price, the lower the uptake. At $130 to $150 per month, uptake will be a lot less than 40%.
The water and electric grids in my city have near 100% uptake, especially in the denser parts of the city.
While in most cases I would agree with the uptake analysis (eg, if we were talking about coffee shops), I'm not sure that it applies to the particular case of talking about rolling out a government monopoly in place of a natural monopoly using city bonds to cover the upfront cost (and time to smother people not using the city network).
Further, I was actually just interested in plausibility: I didn't account for growth rates, the attractiveness of a city wide network, competition between ISPs, etc. That the answer was ~100 and not ~10 or ~1,000 is interesting to me, because it means that even if the technology isn't there, that the details work out a lot closer than I was expecting -- expensive, but not impossible.
tl;dr: Deciding if we should roll out government infrastructure isn't quite the same analysis as seeing if a business works, and I only did the latter as a proxy for plausibility.
Replacing all equipment every three years is way too aggressive. No network operator spends $1000 per subscriber for new equipment every three years. A more realistic and conservative replacement schedule would be seven years.
You are right about the bonds, in fact it should end up being very profitable.
If fiber is run through people's neighborhoods, 1gb is not any sort of hard limit, it is just a nice round number that coincides with 1gb ethernet being a limit of most people's equipment. Even now DOCSIS 3.0 can give people 300mb connections over cable, so cable has advanced an enormous amount.
Just like an ethernet cable has scaled up from 10mb to 1000mb fiber can carry more. You could wire your home up with a 40gb network right now if you wanted to pay for the $400 network cards and more expensive routers.
Time Warner Cable residential is in the process of upgrading to 300mb and DOCSIS 3.1 is capable of 1gig/s download. Fiber has huge advantages over any kind of copper because there is no RF interference involved. Initially Verizon had higher costs per service call vs cable, but I heard that they are on parity or lower now.
It's not that cut and dried. The kind of people who like fiber are upper-middle-class folks and technologists with disposable incomes, both of which are great for the tax rolls. Their presence is worth far, far more than $10k/household over the duration of their stay in the city.
jxf was probably assuming that fiber is faster and more expensive than other forms of Internet access. Poor people rationally would not pay extra for faster Internet, because there are diminishing returns to higher bandwidth. But as someone else said, if you have nothing today then installing fiber is probably no more expensive than installing cable or DSL.
10,000$ loan @ 5% = 41.66$ per month. If profit per user after loan payments was say 10$ per month per house your market cap would be way less than the value of the fiber network, but that's due to the outstanding loan.
My guess is they could charge around 60$ a month and make significant profit while paying down the outstanding loans faster than depreciation.
It depends on the raiting, but right now 30 year Tbills are 3.2% and AAA sticks close to that. Right now a simple A raiting for a 30 year fixed bond is 4%.
If that were only the case... My parents live in one of these rural Western Massachusetts towns building their own fiber networks, Leverett, Ma. The town, is which directly north of Amherst and the Five College, had ZERO available landbased broadband options.
So no, they didn't spend huge amounts of money just to avoid the monopolist ISPs as there are none servicing the area. And this is pretty typical of the towns participating, it's not that they have crappy service, it's that they have NO service.
Also, having fiber has other ramifications. Try selling a house these days without available broadband and tell me how far you get or how much you have to drop the price. You'll get nowhere. My parents went through this several years ago when they were planning on moving, and quite literally had people simply turn around walk out when they found out that broadband was unavailable at the house.
Verizon is basically letting the copper in the area rot... it wasn't until 97? or 98? that my parents got touch tone dialing, and after every storm the line quality got worse and worse. At least now, for better or worse, the town and its residents are on the hook for the quality of service.
And I think everyone should have to dogfood their own products over a satellite connection. You'd be surprised how much everything sucks or breaks when you've got huge latency and basically modem++ speeds.
Exactly- I am on satellite Internet, and it is amazing how many sites are difficult to use or break entirely (even Android apps that won't work at all) because of the latency. There was a study about a year ago that found that having Fiber would add 5-10k or more on to the value of a home.
I didn't read it as wanting to avoid the big ISPs. Their problem is that the big ISPs don't want to build out in those areas (too sparse, not enough customers, whatever).
The thing too, is that if you take a large amount of profit out of the equation that you would give to incumbents, then you know that you spend more upfront, but will save long term... and get better service the whole time. So if you have the up front will and money, you can improve your situation for less money than you would spend otherwise, aggregated over many years.
I lived in Monterey, MA as a camp director for years. We had dial up forever and they were able to get 100 kbs in 2003 till today at almost $75 a month.
There is no way I can tell you how rural it is. When we had a medical emergency we speed 90 mph + one time down the road to meet the ambulance half way to the hospital that was 45 minutes away. Houses are about 1/2 mile away from each other on dirt roads that are not plowed during the winter. The center of town equals one general store and the post office and maybe 8 homes. The one saving grace for funding is that many rich and famous people have summer homes there. It would be great for these people to actually have
Sounds a lot like where I was born. Well outside of the summer homes for rich people bit that is.
Fun bit about not plowed roads in winter. We had a storm come through one year in the... 90's? can't recall but anyway the national guard had to, well there is no good way to describe this, tunnel might be a good analogy, their way through 13" snow drifts.
That was fun. Was like driving through the death star for the rest of the winter.
What? Boston has both Comcast and RCN, the latter of which is awesome and the former is decent (unlike how they are in other areas) due to the competition- I've used both. There's also FiOS depending on where in Boston you are.
What Boston neighborhood -- not nearby city, Boston neighborhood -- has FiOS?
I was fairly certain Verizon refused to deploy after Menino denied them tax breaks for a buildout, and have declared that they will never deploy within city limits. Ever.
If I could get FiOS within Boston city limits, I would've moved to said neighborhood already. To be fair I can't complain about Comcast's service over the past 7 years at all -- I get what I pay for, been down once ever I think -- but I'd take FiOS in a heartbeat.
That was my point. Arlington is not Boston. It is Arlington. It was incorporated in 1807 and has not been annexed by Boston since. That's not the case for former towns like Charlestown and Dorchester (which have been annexed and are now large neighborhoods of Boston), but Arlington is not Boston -- which is exactly why Verizon was willing to deploy FiOS there.
You cannot get FiOS within Boston city limits. Though I'm well aware that you can get FiOS in surrounding cities.
1 GB/s for $109 a month, so amazing. The crazy thing is nearly all WiFi can't even burst close to 1 GB/s, so to fully utilize the pipe, you'll need to hard-wire in.
Why is it to this day, we have Electricity and Water Pipes, as well as telephone line ( Who uses that? ) all built and layout into our new home but no one consider a CAT6/7 cable or even fiber cable? These Cable should all go to the bottom of the building where different ISP can easily be connected and provide Internet connection. Solving the last mile problem as well as bring in more competition driving prices down.
“Our family has lived in Goshen for almost 30 years. Over that time during town meeting, we’ve debated the costs of a fire truck, an ambulance, several highway trucks and police cruisers, capping our dump, a new elementary school, an addition to the high school and now the construction of a regional broadband network. Never [before] in the history of Goshen have we had to change the venue of the meeting because so many people turned out.” All 240 voters were unanimous in their support of the bond authorization.