Tag Archives: muni broadband

Tacoma weighs risk and reward with list of muni broadband suitors down to two

by Steve Blum • , , ,

The City of Tacoma has narrowed the list of possible buyers of its municipal cable system – aka Click – down to two local companies, Wave Broadband and Rainier Connect. A year ago, the city issued a request for information and qualifications and received responses from five companies. Only two initially met the city’s specifications – Wave and Yomura Fiber – but subsequent talks convinced Rainier to take on more risk, and led to Yomura’s exit, due to ownership concerns. Click is operated by, and operationally integrated with, the city’s municipal electric utility, which has a different set of federal rules to follow.

CTC Technology and Energy, an east coast consulting firm, helped evaluate the proposals and is recommending that the city go with Rainier, largely because it’s offering to lease the system for $2.5 million to $3 million per year, while Wave is only offering $1 million a year. But, CTC’s report acknowledges, Rainier is a riskier partner…

Wave is a large, private equity-backed, enterprise that is part of the sixth-largest broadband company in the United States. As such, it should easily be able to scale to meet the obligations contemplated in the term sheet and thus represents a very low risk proposition for the partnership.

Rainier Connect is a smaller, family-owned enterprise with far less scale and resources, and thus entails some more risk for TPU and the City than would a partnership with Wave. Rainier Connect does appear to have the capability to scale up operations to meet its proposed obligations.

Wave also has considerable experience building and operating broadband systems as the third player in markets with incumbent telephone and cable companies. Rainier doesn’t appear to have much, if any, experience as a facilities-based wireline cable company or Internet service provider.

Both companies promised to abide by network neutrality principles, and to offer discounted service to low income households, as required by the city. But they fudged on open access commitments.

As CTC’s analysis put it, both companies “will provide wholesale services consistent with its practices and policies in other markets”. Which really means that the access available to third party Internet service providers won’t be so open – in this case, probably a good thing because Click already competes with Comcast and CenturyLink in Tacoma. Forcing a private operator to cede space to other competitors on an unrestricted basis could very well lead to the kind of business case death spiral the Utopia project in Utah found itself in.

For now, the city is taking public comment before making a final choice.

City of Tacoma fact sheet, Click private/public partnership, 5 March 2019
CTC presentation, Click private/public partnership, 5 March 2019
CTC report, Rainier and Wave term sheets, 5 March 2019
CTC summary, Rainier and Wave term sheets, 5 March 2019
Rainier Connect, Click term sheet, 5 March 2019
Wave Broadband, Click term sheet, 5 March 2019

More documents regarding the City of Tacoma and Click are here, and more blog posts are here.

Newsom’s budget plan lowers barriers to public broadband financing

by Steve Blum • , , , ,

Following up on one of the items in his campaign manifesto, California’s new governor, Gavin Newsom, might make it easier to finance municipal broadband projects. One of the many, many ideas offered in his maiden budget proposal is to make it easier to form enhanced infrastructure financing districts by eliminating requirements for voter approval of bond issues…

Various economic development tools have been introduced following the dissolution of Redevelopment Agencies (RDAs), including Enhanced Infrastructure Financing Districts (EIFDs). However, only three EIFDs have been formed since statute created them in 2014. EIFDs can be created by cities or counties without voter approval and expend tax increment revenues without voter approval. However, an EIFD must receive 55-percent voter approval to issue debt.

The Budget encourages the formation of additional EIFDs through removal of the 55-percent voter approval requirement to issue debt. This change will allow EIFDs to support longer-term infrastructure commitments, similar to former RDAs.

Although it’s always been arguable that EIFDs can build and operate publicly-owned broadband infrastructure, the California legislature removed all doubt last year when it passed assembly bill 1999. Public agencies in California – cities, counties and special districts, including EIFDs – were given explicit authority to get into the broadband business.

As with the redevelopment agencies that were killed off by the legislature in 2012, an EIFD would repay the debt with future increases in tax revenue attributable, in theory, to the infrastructure improvements. It’s a complicated process. Even if Newsom succeeds in making it easier for EIFDs to borrow money, that doesn’t mean it’ll be easy.

Forming an EIFD will not be the first step towards a community broadband project. It will come further down the road, after a city or other local agency decides it wants to get into the broadband business. But it’s one more tool in the kit, and that’s useful.

New year but old questions for technology and telecoms policymakers

by Steve Blum • , , , ,

Five major broadband issues will top the public policy charts in California and at the federal level in 2019. In no particular order…

  • Net neutrality – The ball is in a federal appeals court in Washington, D.C., where arguments will be heard in February over whether the Federal Communications Commission acted properly in 2017 when it declared broadband is not a telecommunications service. California’s net neutrality law is on hold until that case plays out, which could take years. Congress is unlikely to act. In 2018, house democrats couldn’t even agree amongst themselves whether to overturn the FCC decision.
  • Privacy and data ownership – Big corporations with big political budgets will be urging congress, on the one hand, to preempt state privacy legislation with friendlier federal rules, and on the other hand they’ll be trying to water down California’s new privacy law. A bill that’s already been introduced in Sacramento could do that. The larger debate – who owns customer data, consumers themselves or the companies they share it with? – is just beginning. Congress, courts, regulators and administrators will be involved, but tech companies can get in front of the issue. 2019 is their opportunity to offer answers. If they don’t, governments will decide for them.
  • Monopoly vs. competition – Courts and regulatory agencies will decide whether competition continues to shrink as monopoly model ISPs grow. T-Mobile’s takeover of Sprint is under review by the FCC and the CPUC. The federal justice department gets a look too, and it continues to challenge AT&T’s purchase of Time Warner in court. Cable and telco lobbyists are whispering wishes into compliant republican ears at the FCC, this time with the aim of killing municipal broadband competitors. The CPUC looks at broadband affordability and the future of PG&E, one of the few remaining sources of independent dark fiber. It also has to decide if it’s serious about the conditions it puts on mergers and acquisitions, as it did with Charter’s purchase of Time Warner cable systems.
  • Local ownership and authority – Another federal court fight heats up, as an FCC order regarding wireless facilities is otherwise set to take effect on 14 January 2018. It limits what local government can do with property they own in the public right of way, restricts their authority to review permit applications, and sets shorter shot clocks for decisions. Lobbyists and lawyers for mobile carriers are already using the order to try to force cities to do their bidding, and they’ll be handing out cash to legislators in Sacramento, while asking them to bake FCC rules into California law.
  • Broadband infrastructure subsidies – Applications for grants from the rebooted California Advanced Services Fund (CASF) are due in April, and in a couple of weeks incumbent Internet service providers have a chance to exercise the right of the first night first refusal that California lawmakers gave them in 2017. Cash payments from AT&T, Comcast, Charter and other monopoly model ISPs tilted the playing field. The California Public Utilities Commission tried to level it a bit; we’ll see in the next few months whether CASF will improve broadband access in rural California, or simply be a $300 million slush fund for telcos and cable companies. The federal agriculture department is rolling out a $600 million rural broadband grant and loan program, with billions more on the way, and it’s better designed to benefit rural communities.

The players are changing, too. New CPUC and FCC commissioners will take their seats, and a new administration takes office in Sacramento. Not much has changed at the California legislature, though. Democrats have a super majority in both houses, with familiar faces leading key telecoms committees. Charter, Comcast, AT&T and Frontier know where to send the checks.

Lobbyists ask FCC to hit cities with another taxpayer funded broadband mugging

by Steve Blum • , , ,

The ravaging horde of (largely) telco and cable lobbyists known as the Federal Communications Commission’s broadband deployment advisory committee (BDAC) has drafted its latest letter to Santa advice to FCC chair Ajit Pai.

Not surprisingly, it thinks that Charter Communications, Comcast, AT&T and other monopoly model broadband service providers aren’t getting enough love from local governments. Love, in this case, meaning give us everything you have, then go out and get us more.

If a city owns dark fiber, then it should be required to hand it over to “any private sector communications provider” on demand, and only be allowed to keep enough for its “reasonably anticipated 50-year fiber needs”. That’s one of the giveaways that telecoms lobbyists put into the latest draft of their model state broadband code. The FCC already endorsed the seizure of city property, such as light poles, in the public right of way, so the next step, according to the draft, is to claim the same squatters rights on “buildings and other vertical assets that are located outside of the public right of way”.

But why stop at taxpayer owned assets? Why not tax anyone whose business depends on broadband, and give it to telcos? As Jon Brodkin writes in Ars Technica, that’s what AT&T asked for, and largely got…

An AT&T executive who is on the FCC advisory committee argued that the recommended tax should apply even more broadly, to any business that benefits financially from broadband access in any way. The committee ultimately adopted a slightly more narrow recommendation that would apply the tax to subscription services and advertising-supported services only.

It’s difficult to imagine that the FCC will try to impose this wish list on states and local governments, but then it was hard to believe they’d try to preempt local ownership of street light poles. As they did.

More likely, this time around the republican majority on the FCC will say you’ve been nice little lobbyists this year, and put their stamp of approval on the draft. Then they’ll hand it down to state lawmakers who are, collectively, being paid millions of dollars by those same lobbyists.

California’s next governor talks the broadband talk, but will he walk the walk?

by Steve Blum • , , ,

California governor-elect Gavin Newsom has a broadband development track record of sorts. Whether that will translate into sound telecoms infrastructure policy remains to be seen.

When he was mayor of San Francisco, Newsom made a big splash with a deal with Google and Earthlink to blanket the city with WiFi, with free service playing a prominent role in a difficult to understand business plan. That was back during the great municipal WiFi bubble of the mid–2000s. The deal collapsed, but Newsom pushed on with a small ball program to install WiFi hot spots, including in public housing communities.

Newsom didn’t talk much about it during the campaign, but broadband rated a mention on his website

We can’t build an innovation culture with global reach or reap the benefits of the information age without the capacity to send and receive vast amounts of information. As Governor, Gavin will align infrastructure decisions with regional strategies, pursue new and creative approaches to financing including Enhanced Infrastructure Financing Districts [EIFDs] and the new state bank, and lead the movement to make universal access to high-speed broadband a reality for every Californian.

It’s not exactly a jump over the big hurdle – finding the money to pay for modern broadband infrastructure – but at least there are a couple of small hops in front of it. EIFDs were supposed to be a fast track to bond financing, backed by the tax revenue that was expected to result from infrastructure-driven economic growth. Assembly bill 1999, passed by the California legislature and signed by governor Jerry Brown earlier this year, specifically allows EIFDs to get into the broadband business.

But pretty much everything under the sun rates a line or two in Newsom’s encyclopedic campaign platform. Whether any given issue makes it from the wish list to the to do list is anyone’s guess.

California’s new muni broadband law establishes rights, and net neutrality responsibility

by Steve Blum • , , , ,

California governor Jerry Brown actually signed two network neutrality bills into law on Sunday. The Big Kahuna was senate bill 822, which establishes net neutrality rules for Internet service providers doing business in California. But alongside it was assembly bill 1999, which, among things, requires publicly owned broadband systems to abide by net neutrality principles, whether or not their private competitors have to.

It’s a mixed blessing. On the one hand, it’s good thing for muni broadband systems to operate on a net neutral basis, both from a public policy and a customer service perspective. On the other hand, it might not always be a viable way of doing business. If SB 822 is tossed out by a court, and the current anything goes federal policy stays in place, then a few years from now the broadband business might look completely different. If muni broadband systems are handcuffed to a business model that is no longer competitive, the only ones who will benefit are the big, monopoly model ISPs like AT&T, Charter and Comcast. That’ll be a problem to worry about later, though.

AB 1999 does two other things. It lifts a restriction on community service districts (CSDs) that effectively bars them from the broadband business. It was the only meaningful restriction on public agency broadband on the books in California.

The bill also clearly spells out that cities, counties and certain kinds of special districts, including CSDs, county service districts, utility districts and infrastructure financing districts can offer broadband service. It’s long been assumed they can, but there wasn’t much in the way of explicit legal authority. Cities have a long history of precedent to rely on, but other kinds of agencies don’t have that level of confidence to fall back on. I know from experience that there is a huge difference between “there’s nothing that says you can’t” and “the law specifically says you can” when you’re trying to convince local officials that a broadband enterprise is a good idea.

But there’s also potential danger. A law that explicitly allows muni broadband service is a tempting target for corporate lobbyists who want to fiddle with it, to the benefit of their business models and at the expense of the public. We’ll have to keep a permanent watch on California’s new muni broadband law.

California muni broadband bill lands on governor Brown’s desk

by Steve Blum • , , ,

Net neutrality isn’t the only broadband issue awaiting a decision from California governor Jerry Brown. As the legislative session wound down to a close last week, the California senate and then the assembly approved assembly bill 1999 more or less on party lines – democrats mostly voted aye, republicans no.

AB 1999 explicitly sets out in law what has been the practice and, to the extent its been challenged, the long standing precedent that Californian cities and some kinds of special districts can build broadband systems and offer service, whether or not it’s in competition with cable and telco monopolies.

The bill also removes the only significant barrier to public broadband that’s clearly written into California’s statutes: the byzantine restrictions – amounting to a ban for all practical purposes – on community service districts (CSD) that want to get into the broadband game. CSDs are halfway houses for unincorporated communities that want a higher level of municipal services, but don’t want all the legal and financial overhead that comes with being a fully incorporated city. Yet.

Net neutrality requirements are also written into AB 1999, but it’s a double-edged sword. Broadband service provided by a local agency has to adhere to the basic net neutrality principles: no blocking, throttling or paid prioritisation. That seems to be a good deal for muni broadband customers, but it comes with a risk. If private sector Internet service providers don’t have to follow net neutrality rules, that may be a competitive advantage for muni ISPs. But if Internet fast lanes, slow lanes and no lanes become the norm, muni systems would likely face higher costs to swim against the tide, and would have to charge customers higher prices. Or would simply be undercut by monopoly-model competitors who can shift costs to make monthly subscription rates look cheaper.

Governor Brown has until the end of September to decide what to do with AB 1999, and the hundreds of other bills approved last week by California lawmakers.

California legislature to decide privacy, Internet commerce bills

by Steve Blum • , , , ,

Consumer privacy, police surveillance, online retailing, bots and social media were all targets of bills introduced this year in the California legislature. One major bill already passed, a couple are dead and the rest are queued up for a decision this week, as lawmakers prepare to finish up the 2018 session on Friday.

Assembly bill 375 established strict consumer data privacy rules. It was signed into law by the governor earlier this year. It’s being tweaked, though. Senate bill 1121 exempts some medical, financial and driving record information that’s already regulated by federal and/or state law. It also allows credit reporting agencies to continue to use personal information, whether or not consumers consent, to the extent permitted by federal law. It makes other changes, mostly regarding how the law is enforced.

As far as I can tell, the amendments are technical. But SB 1121 should put everyone on notice, too: the legislature can and will change California’s new data privacy law. Given the influence that lobbyists and their cash payments to lawmakers have in Sacramento, future changes may not be so benign.

Other bills introduced this year include…

  • AB 1906 and SB 327 – aimed at the Internet of things, these two, linked bills require passwords and other security features on Internet-connected devices. Awaiting floor votes in the senate and assembly, respectively. Each will have to go back to its “house of origin” for concurrence votes on amendments made along the way.
  • AB 2167 – defines information gathered by ingestible sensors that collect or send information about an individual, and linked apps and devices, as protected medical information. On the senate floor, with assembly concurrence needed.
  • AB 2511 – requires merchants to “take reasonable steps to ensure that the purchaser is of legal age” of anyone who might purchase or view age restricted products or services. It was originally targeted only at online sellers, but now includes all businesses. The range of products and services covered was narrowed, too. Waiting for a floor vote in the senate, then would go back to the assembly for concurrence.
  • AB 2935 – adds privacy protections to health monitoring programs, online and otherwise. Would have had implications for fitness and athletic social media, such as Strava. It died in a senate committee.
  • SB 1001 – requires bots – computer programs that mimic people, used by companies to chat with customers – to identify themselves as such. Only applies to websites that get 10 million visitors a month. On the assembly floor now, with senate concurrence also needed.
  • SB 1186 – required local governments to disclose the types and uses of law enforcement surveillance technology. Quietly killed in the appropriations committee by assembly leadership.
  • SB 1424 – formerly a far reaching attempt to police free speech on the Internet, it was neutered as it moved through the legislative process and now just calls for the California attorney general to study “the problem of the spread of false information through Internet-based social media platforms”. If someone donates the money to do it. Awaits an assembly floor vote and senate concurrence.

With a week left, California muni broadband bill still on legislature’s to do list

by Steve Blum • , , , ,

A bill that allows more types of local agencies to get into the broadband business, and requires such municipal broadband providers to abide by network neutrality principles, awaits a decision by the California senate. Assembly bill 1999, authored by assemblyman Ed Chau (D – Los Angeles), would remove a restriction that makes it all but impossible for community service districts to get into the broadband business.

It also explicitly allows other types of local agencies, such as county service areas and enhanced infrastructure financing districts (EIFDs), to provide broadband services. In theory, there’s nothing preventing that happening already, but on the other hand there’s nothing that says it can. To the extent restrictions exist, Chau says he wants to remove them

California law currently authorizes municipal utility districts and public utility districts to operate their own broadband networks, but other forms of independent local government have limited authority to do so. Restricting local governments from building out their own high-speed networks is counterproductive to closing California’s digital divide, especially in rural areas where only 43 percent of the population has access to broadband in their households, or in areas that only have access to one provider.

A parallel bill, SB 1145, gives EIFDs a little more financial flexibility. It would allow them to finance some ongoing maintenance costs, although not with money raised through a bond issue.

The net neutrality requirements – no blocking, throttling or paid prioritisation – aren’t as comprehensive as those proposed in senate bill 822, which would apply to public and private sector Internet service providers alike. But if SB 822 doesn’t make it into law or is thrown out later by a court, the net neutrality obligations in AB 1999 would remain.

AB 1999 is just one of hundreds of bills that have to be acted upon by next Friday, when the legislative session ends. It has to be approved by the California senate, and then go back to the assembly for concurrence with a technical amendment that was made a couple days ago.

No consensus on public property lease rates, but FCC committee moves ahead anyway

by Steve Blum • , , ,

Telecoms companies and local government representatives didn’t agree on how lease rates for assets such as street light poles should be set, but at least they were able to articulately lay out their positions and identify what they do agree on. The Federal Communications Commission’s broadband deployment advisory committee received a draft report last month that looked at how fees and rental rates are set. It was produced by a sub committee that had two members from local agencies, plus a municipal lobbyist and a state government representative. The other fifteen committee members are mostly lobbyists for telecoms companies.

The group agreed that one-time charges, such as permit application fees, should be based on costs, but there was no consensus on how lease rates for public property should be set. Industry lobbyists think those should be set on a strict cost basis, arguing that public assets “are intended for use for the public good”, which they equate with expansion of their networks.

Local government representatives prefer a fair market value approach because, among reasons…

It is unfair to prioritize one industry (wireless industry) over all others in pricing the public rights-of-way and public infrastructure access. Equal pricing of private access to public assets is especially a concern where there is no obligation for providers to serve all residents (which is required of other users of the rights-of- way who may pay market-based fees).

On the whole, the report is an even handed document that focuses on principles both sides accept, and outlines the remaining differences.

A model state law, developed by another sub committee, is, to say the least, not as well balanced. The State Model Code for Accelerating Broadband Infrastructure Deployment and Investment proposes to make all publicly owned assets that have some relevance to telecoms – including dark fiber – available on demand and on a narrowly defined cost basis. The full committee, which has been sharply criticised for its industry-heavy membership, adopted that recommendation.