Tag Archives: municipal broadband

Gonzales, California putting broadband into every home, business

Basic broadband in every home and fast fiber for every business: that’s the goal endorsed on Monday by Gonzales city council members. The plan, as presented by staff, is to issue two requests for proposals.

The residential RFP is ambitious. There are 1,800 homes in Gonzales, which is located in California’s Salinas Valley. The city wants to provide a basic, lifeline-level of service to each one. As the report presented to the council explains

Staff has been exploring the possibility of entering into a bulk services agreement with a qualified Internet service provider (ISP) to deliver a basic level of Internet access to every home in Gonzales. Although this is a novel approach for a City to take, it is a common method of contracting for service in private communities. There are significant differences between the legal, regulatory and market conditions in cities and private communities, but staff has concluded that distributing a Request for Proposals to qualified ISPs, will clarify those issues and should produce legitimate options that can be implemented.

The second RFP would focus on building out fiber infrastructure in the commercial and industrial areas of the city. A recently completed middle mile project, built and owned by Sunesys/Crown Castle and largely paid for by a grant from the California Advanced Services Fund, runs the length of Gonzales, connecting to a Level 3 facility in Soledad to the south and to several long haul routes in Salinas, Watsonville and Santa Cruz to the north. The city is already in the process of building its own connection to this middle mile fiber, which will be one of the assets on the table when the RFPs are issued.

AT&T is the only company currently offering broadband service on a citywide basis, and it reaches most, but not all, homes and businesses. Download speeds range from 3 Mbps to 18 Mbps. The California Public Utilities Commission ordered Charter Communications to begin providing full triple play service to all residential areas by May 2018. That’s the result of a settlement reached between Gonzales and Charter, during the regulatory review of its purchase of Time Warner and Bright House cable systems last year. Commercial and industrial areas aren’t included in the agreement, though.

Naturally, both AT&T and Charter will be invited to submit proposals, along with any other interested ISPs. The two RFPs and more details regarding the financial and technical aspects of the plan are expected to be released later this summer.

City of Gonzales Broadband Infrastructure Strategy Update, 15 May 2017

I’m assisting the City of Gonzales with its broadband initiative and helped with its negotiations with Charter. I am not a disinterested commentator. Take it for what it’s worth.

Muni broadband endorsed by Comcast, again


Comcast jumps on board.

Are you wondering whether or not you live in a place where Comcast will soon upgrade at least some of its broadband infrastructure and technology to the high speed, DOCSIS 3.1 standard? All you have to do is check to see whether there’s a municipal broadband project underway nearby. That’s a very reliable way to gauge the esteem that Comcast bestows upon your town.

According to a story by Daniel Frankel in FierceCable, Chattanooga, Tennessee is the next stop on Comcast’s DOCSIS 3.1 road trip, where it will begin offer much cheaper 1 gigabit service to homes and businesses…

Comcast had been delivering its pricey 10-gig fiber service to local Chattanooga businesses, and 2-gig fiber service to local residences. The DOCSIS 3.1 products are much cheaper, starting out at around $140 a month without contract.

Chattanooga’s publicly owned electric utility built a fiber to the premise system and began offering gigabit speeds in 2010, with faster service following in later years. The project, which was initially funded by a $100 million federal stimulus grant, has been credited with amping up Chattanooga’s economic mojo, with neighboring communities begging for the network to be extended.

Comcast’s Chattanooga announcement comes a week after it promised a DOCSIS 3.1 upgrade in Huntsville, Alabama, which also has a municipal electric utility in the process of building an FTTP system, which will be operated by Google Fiber. Huntsville and Chattanooga join a very short and select list of Comcast DOCSIS 3.1 upgrade targets, which includes two other Google Fiber cities, Nashville and Atlanta.

It’ll be interesting to see what Comcast does with its pricing. The Chattanooga muni system offers a gigabit to residential customers for $70 a month, half of Comcast’s standard rate. On the other hand, Comcast can spread costs and generate profits from a wide range of video and other services, over a nationwide footprint. There would seem to be little point for it to go head to head with a muni system if it wasn’t planning to use that market power to the max.

Muni fiber build RFP issued by Union City, California

A lot of long haul fiber criss-crosses through Union City, a town of about 70,000 people tucked in between Hayward and Fremont in the East Bay area, just north of Silicon Valley. The City of Union City has issued a request for proposals from companies interested in bidding to “design and install a high-speed dark fiber network in City-owned conduit” to take advantage of that wealth, and to spur development of a new business and residential area…

The Union City Station District is a high-density development area located around the Union City BART Station. At buildout, the Station District will have 1.2 million square feet of office and 850+ residential units and live-work space along 11th Street.

An adjacent 80-acre in the greater Station District area is undeveloped and underdeveloped with some public streets. This area is zoned for new office, research and development, and flex-industrial businesses. Conduit and fiber will need to be installed in this area as new streets and additional points of access are built to accommodate the growth in a second phase of design and installation of a City-owned high-speed fiber network.

That high speed network will be built from a base that includes several more miles of city-owned conduit, and adjacent and intersecting middle mile fiber, including routes owned or operated by BART, PG&E, Level 3, Zayo, OpticAccess, AT&T, Verizon and XO Communications.

To answer the first question that always gets asked, yes, the City has a budget for it.

The deadline for questions is 11 October 2016 and proposals must be submitted by 18 October 2016. The RFP documents include the required elements for responses, as well as maps and plans of the area.

The official documents can be downloaded here, and that’s where any updates will be posted. If you’re just curious, here are direct download links that are current, as of today:

RFP for high speed fiber in the Union City Station District
Exhibit A
Exhibit B
Exhibit C

Tellus Venture Associates assisted the City of Union City in identifying the market opportunity and in developing the RFP. I’m not a disinterested commentator. Take it for what it’s worth.

Net neutrality decision boosts FCC muni preemption case, but not enough


Still not going anywhere.

The federal appeals court ruling that upheld the Federal Communications Commission’s common carrier and network neutrality rules for broadband did collateral damage to the State of Tennessee’s attempt to overturn the FCC’s preemption of state restrictions on local municipal broadband initiatives. But it doesn’t appear fatal, or even particularly serious.

At the same 2015 meeting where it voted to regulate broadband as a common carrier service, the FCC also decided to toss out state laws in Tennessee and North Carolina that prevented two muni fiber systems from expanding into neighboring jurisdictions. The two states appealed, with Tennessee walking point, and the case was heard by three appeals court judges in Cincinnati in March.

Tennessee’s case is based on three primary arguments:

  • Congress can’t tell states how to manage and delegate authority to local governments.
  • Even if it can, congress didn’t make a “plain statement” saying the FCC could insert itself into that state-local relationship when it passed the telecommunications act of 1996.
  • More than that, the section of the telecommunications act that the FCC is relying on – section 706 – doesn’t grant any authority at all and it’s just a general mission statement.

When the appeals court in Washington upheld the FCC’s common carrier decision last week, it reaffirmed an earlier ruling that section 706 does give the FCC enough additional authority over broadband service to implement the new rules. That prompted a quick response from Tennessee, telling the Cincinnati judges that the Washington guys had it wrong and they should ignore them. An even more hurried reply from the FCC urged the judges to adopt the precedent set by the DC court.

The Cincinnati judges are free to rule as they please regarding the FCC’s muni broadband preemption, but it’s never seemed likely that they would negate section 706 altogether – although if they did it would almost certainly trigger a review of both the common carrier/net neutrality rules and the muni preemption by the supreme court. Nor will they buy the argument that congress can’t involve itself at all in matters concerning state discretion over local government – that’s already well ploughed ground.

Tennessee’s remaining argument is much stronger. Section 706 is broad reaching, but it is also vague and doesn’t contain anything like a “plain statement” allowing the FCC to meddle in the relationship between state and local governments. During oral arguments in March, the judges pressed hard on that point and the FCC’s attorney couldn’t answer it effectively.

There’s no timetable for the Cincinnati court to come to a decision. It could happen today, or sometime next fall. When it does come down, though, I’m still betting that the FCC’s preemption of muni broadband restrictions will be thrown out.

AT&T’s political troops muscle Tennessee into submission

Lobbyists, primarily from AT&T, won the day in the Tennessee legislature when they leaned hard enough on a handful of lawmakers and killed a bill that would have allowed municipal broadband utilities to expand beyond city limits. According to a story in the Chattanooga Time Free Press, a “platoon” of AT&T political operatives descended on the Tennessee capitol to convince a bare majority of a key subcommittee to kill a compromise bill that would have allowed one pilot project to move ahead.

What they fear most is competition. Muni broadband is fine for communities that AT&T has redlined, but not where it already provides service, according to the newspaper

AT&T, Comcast and other providers say it’s unfair to have them compete against government entities, and they insist most areas are served well despite customer complaints.

In a statement, AT&T said the bill wasn’t going to serve its intended purpose.

“AT&T has been clear that we aren’t opposed to municipal broadband when it is targeted to unserved areas, but none of the bills considered … has any provision that would limit government expansion to unserved areas or even focus on those areas.

AT&T’s position is a bald faced assertion of its right to own and exploit a government protected monopoly. It’s fighting its competitive battles by political means, rather than with, say, better service at a lower price. In Tennessee, as in California, AT&T has learned that it’s far cheaper to buy a protected monopoly by stuffing a few thousand dollars into a politician’s pocket than it is to defend one in an open market.

Google might motivate taxpayers to back FTTH

From a city’s perspective, Google Fiber’s new business model – lease existing wholesale fiber, light it up and sell retail service to subscriber-dense buildings – is both an opportunity and a problem. The opportunity is clear: rapid deployment of fast, cheap fiber to the home (and business) service for the lucky few that can get it.

And that’s also the problem. The lucky few part anyway, particularly if municipally-owned fiber is involved. One of the fundamental tenets of city government is that municipal services are available to everyone. Maybe not equally, maybe not totally – there are always exceptions – but at least in principle. There’s always been a distinction between services that are provided to businesses and those that are delivered to individual residents, but Google is blurring that line to the point of irrelevancy.

It’s usually not problem when a business – even a residential building owner – leases municipal fiber and uses it provide retail broadband services. The opportunity is available to any business, large or small, that wants to take advantage of it.

Google is different. It’s barely an exaggeration to say that the company and the brand touches everyone on the Internet and everyone who wants to be. If the reason your friend who lives in an apartment is getting FTTH service and you aren’t in your single family home a few blocks away is – as Google is sure to say – the city built fiber to your friend and not to you then you’re going to be pissed off about it.

Which might ultimately lead to the solution. Muni FTTH requires taxpayers to put skin in the game. Even in Santa Cruz, taxpayers are the ultimate guarantors even though a local company is taking the frontline risk. Google didn’t go that far in Provo or San Francisco, and it almost certainly isn’t in Huntsville. Google’s new business model leaves it up to local taxpayers to pay the capital cost of FTTH service. The very visible divide between those served by that business model and those who are not could be the motivation that makes taxpayers willing to do so.

Wheeler keeps muni broadband cards close to chest


Muni broadband? Never heard of it.

Eight republican senators, including presidential hopeful Marco Rubio, sent a letter to Federal Communications Commission chairman Tom Wheeler asking four questions about municipal broadband (h/t to the Baller Herbst list for the pointer). Or it might have been eight separate letters – doesn’t matter. Wheeler sent separately addressed but otherwise identical letters in reply.

If you take Wheeler’s letter at face value, the FCC has no plans to anything at all regarding municipal broadband. But it’s a mistake to take anything Wheeler says at face value. Parsing those words a little more carefully…

  • Muni ISPs aren’t getting any money from the FCC rural broadband experiments program, and won’t unless they jump through hoops first, such as becoming a certified (and regulated) telephone company and getting designated as an eligible telecommunications carrier for subsidy purposes. Translated into Californian, that means no FCC money for you. Cities don’t answer to the California Public Utilities Commission and are very happy to keep it that way.
  • If a muni broadband system completely overbuilt a small rural phone company, then that company would lose its subsidies. However, “that situation does not exist today”. Tomorrow, who knows?
  • The FCC’s preemption of state restrictions on muni broadband only applies to Tennessee and North Carolina, but there’s nothing stopping the FCC from extending it to other states, either on a blanket basis or state by state in response to requests.
  • The FCC is maintaining plausible deniability regarding any other muni initiatives. There are “no fiscal year 2016 outreach plans focused on municipal-owned broadband networks”, but there’s “regular contact with…public sector parties around the country”.

It’s a nominally neutral response to politically charged questions. Wheeler is leaving the gate open to two opposite paths: whip out a new initiative at a time of his choosing, or back off from previous full throated endorsements of muni broadband in an election year when lobbyists’ cash is king.

Wheeler’s letter to senator Tim Scott
Wheeler’s letters to all eight senators, if you really care

Muni broadband debate heats up in Tennessee, because it can


Something you don’t see in Washington.

All or nothing federal policies are great when you’re getting it all, but when the political winds shift and you end up with nothing, it’s not so wonderful. That’s why I think the Federal Communications Commission’s preemption of state restrictions on municipal broadband is a bad idea: its current more is better policy will only last as long as three commissioners agree with it, but its authority to regulate muni broadband will live forever. Assuming, of course, that a federal appeals court ends up ruling in the FCC’s favor, which is far from a foregone conclusion.

The case in question involves, among other things, a Tennessee law that prevents a municipal Internet service provider from expanding beyond its city limits. And it’s now the target of a bill introduced in the Tennessee legislature, that’s drawing the usual fire from incumbents, according to a story in the Chattanooga Times Free Press

“We’re talking about AT&T,” Sen. Todd Gardenhire, R-Chattanooga, bluntly told a rally of business owners, families and local officials gathered in the state Capitol. “They’re the most powerful lobbying organization in this state by far.”

The bill has been opposed for years by AT&T, Comcast and other providers who say it’s unfair for them to have to compete with government entities like EPB. But EPB, as well as some lawmakers like Gardenhire, say if the free market isn’t providing the service, someone else should.

“Don’t fall for the argument that this is a free market versus government battle,” Gardenhire said. “It is not. AT&T is the villain here, and so are the other people and cable.”

State legislatures can bend to the will of deep pocketed lobbyists, but they also have to ultimately answer to voters. Muni broadband advocates have a fighting chance at winning support and changing minds, as we’re seeing now in Tennessee. That’s better odds than you get at the FCC, where public input is limited, for all practical purposes, to lobbyists and lawyers with deep pockets, and where rules are written, debated and finalised behind closed doors, with no opportunity for public review.

Competition will make or, likely, break Pacific Grove muni FTTH business model

The business case for a muni fiber-to-the-home play is the number one worry as the Pacific Grove city council considers whether to pay SiFi Networks about a million dollars a year for the next 30 years to build and operate a system.

At its meeting on Wednesday evening, the council heard a presentation from Lee Afflerbach, principal engineer with CTC Consulting, who was asked to evaluate the technology. The questions afterward, though, were all about the business model: would the system make enough money to pay the lease, or would taxpayers be on the hook?

“We have not been engaged to look at the business plan yet”, Afflerbach replied. That said, he talked about muni FTTH projects he’s worked on, saying that the successes he’s seen have been in rural areas with no cable operator, and where the local agency involved already runs an electric utility or similar. Even getting to 30% penetration – SiFi says it needs at least 38% – is difficult when there are already two competitors in the market.

“Where this has been most successful is where there’s only one [competitor] and there’s a successful utility operator”, Afflerbach said. “You don’t have [utility] infrastructure, you don’t have a utility”.

The problem is compounded by the fact that Pacific Grove is served by AT&T and Comcast, which will respond aggressively.

“They are very proficient at changing their rates and such. Predatory is the word, I think”, Afflerbach said. When a small city takes on Comcast or AT&T, the disparity in resources and aggressiveness can be fatal. “It’s sorta like infinity versus zero. Your odds aren’t very good on that”.

There are other factors that, on the surface at least, don’t tend to work in Pacific Grove’s favor. Thirty percent or a little more – call it a third – of households are second homes, and the demographics of the other two-thirds skew older.

The next step is for city staff to dive deeper into SiFi’s proposal; that process was expected to begin the next day.

Muni FTTH pitch in Pacific Grove goes from no cost, no risk to pay us $1 million a year


Bawtree-Jobson in Pacific Grove yesterday.

A fiber to the home plan for the Monterey Peninsula city of Pacific Grove has transformed from a commercial business venture into an appeal for public money. SiFi Networks, a British company with a corporate heritage of real estate development, began last year by putting a simple proposition in front of several Californian cities: give us unlimited access to your streets, sidewalks and, yes, sewers and we’ll build fiber to every home and business in town.

Like Macquarie’s offer for Utah’s Utopia system, SiFi’s business model is to take a low risk middle position in the deal and flip it to institutional investors. Initially, the risk would have been offset by signing long term operating agreements with incumbent cable and telephone companies. But as company CEO Ben Bawtree-Jobson said with classic English understatement yesterday, “there’s been some kick back from those tier one service providers”.

In other words, Comcast and AT&T said no. Which was completely predictable: their business model is 180-degrees away from buying a ride on someone else’s fiber.

Equally predictable, the next step was for SiFi to go back to the city and ask it to finance the deal and take on the risk. With all due humility – oh, okay, with barely sufferable smugness – I’ll take credit for making those predictions last year when a couple of other cities hired me to evaluate SiFi’s offer. Not preternatural clairvoyance on my part – pretty much anyone who understands the business made the same call.

Bawtree-Jobson laid out the new deal:

  • SiFi builds the network for $15 million and Pacific Grove leases it for 30 years at a price in the $1 million a year range (ramps to $852,000 in year 3 with cost of living increases after that).
  • Third party ISPs resell services, with a residential gigabit pegged at $90 a month.
  • If the system hits a 38% take rate in five years, it’ll pay for itself. If it doesn’t, taxpayers pick up the difference.

In very round numbers, each of the 8,000 or so homes and businesses in Pacific Grove would be on the hook for a bit over $100 a year. Call it $10 a month. That’s just for the lease payments if things don’t work as planned. Service is extra. So is the added cost of maintaining 60-plus miles of microtenched streets.

Thirty-eight percent is optimistic for a system starting from zero in a market dominated by AT&T and Comcast. Even more so in an ageing resort town with a high proportion of second homes. On the other hand, the cost – at about $2,000 per premise, assuming the estimate is good – is reasonable. At least from a broadband development perspective. Whether the same is true from Pacific Grove’s perspective is a question for the city council to answer next week.