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Minnesota Local Governments Advance Super Fast Internet Networks

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Local governments in Minnesota have been at the forefront of expanding fast, affordable, and reliable Internet access - often in some of the most challenging areas of the state. ILSR has just released a policy brief to explore some of these approaches: Minnesota Local Governments Advance Super Fast Internet Networks. The full report is available here. The brief examines five communities that have taken different approaches to expanding access, from working with a trusted local partner to creating a new cooperative to building community-wide FTTH networks. Lac qui Parle County has worked with Farmers Mutual Telephone cooperative to bring fiber networks to those who had been stuck on dial-up. Finding itself in a similar situation with no reliable partner, Sibley County is creating a new coop to work with. Scott County built a fiber ring to connect community anchor institutsion to dramatically expand access to high capacity networks and lower telecommunications budgets. That network has helped to lure several major employers to the area by leasing fiber to them. Windom and Monticello have built FTTH networks in extremely challenging conditions. Though Windom is far smaller than most have believed is feasible to build such a network, it has thrived and is now connecting many of the small towns surrounding it. It was essential in retaining jobs in the community that would have been lost without it and has attracted new jobs to the region. Monticello is a younger network and has remarkably benefited the community even as it has struggled financially due to dirty tricks from the telephone and cable companies. The policy brief makes some policy recommendations while focusing on some local solutions to difficult problems in ensuring all Minnesotans have fast, affordable, and reliable Internet access.
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Minnesota Broadband Conference February 4 - 5

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Mark your calendar to attend Boarder to Boarder Broadband: A Call to Action on February 4 - 5 in St. Paul, Minnesota. The event is sponsored by the Blandin Foundation and a long list of organizations concerned with connectivity, economic development, and education ni Minnesota.

ILSR's Chris Mitchell will be presenting on February 5 as part of 9:15 CST Breakout Session, Broadband Infrastructure Development. Other Breakout Sessions are Digital Inclusion, Business and Economic Development, and Applications. A detailed agenda and speakers list is available [PDF].

A description of the conference from the registration page:

The time is ripe for Minnesota legislators and residents to have a “So what? Now What?” conversation about our shared aspirations for Border to Border Broadband:

  • The Governor’s Broadband Task Force is issuing their 2013 report and recommendations soon.
  • The director of the Office of Broadband Development will be in place in January 2014
  • Minnesota state legislators have been touring rural areas to hear directly from Minnesotans about their technology needs and dreams.

Conversations have been happening but…What does it all add up to?

The event will be at the RiverCenter in downtown St. Paul. Attendee tickets are $120 ($60 per day) and Exhibitors pay $300 or $60 if your organization is a nonprofit. You can secure your ticket by registering online. See you there!

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Justifying a Network with Indirect Cost Savings - Community Broadband Bits Episode 80

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Today, Lisa and I are joined by Eric Lampland for a discussion of how a community could justify building a community owned network from the indirect benefits that it would create, including the savings that each household realizes from competition driving down prices. Eric Lampland is the CEO and principal consultant of Lookout Point Communications, which helps local governments that are building a network or considering an investment. Eric and I start by discussing how quickly the cost savings per household add up to equal more than the cost of building a network and we digress from there, covering other topics related to community owned networks. This includes how big cable companies would respond to this approach. I have to note that most community networks have not been justified on this basis - the vast majority of community networks were designed to pay their full costs and they are doing so. Here, we discuss the general benefits of these networks that are often sidelined in the policy discussion and how they alone may justify a fiber network. Toward the end, we begin discussing open access, something we will likely return to in the future as Eric has long both advocated for open access and has some insights into the technical challenges of building such a network. Read the transcript from this episode here. We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address. This show is 25 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed. Listen to previous episodes here. You can can download this Mp3 file directly from here. Find more episodes in our podcast index. Thanks to Haggard Beat for the music, licensed using Creative Commons.

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Washington Post Covers Big Longmont Referendum Victory

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Last week, we were excited by the results of Longmont's referendum, but we sure weren't alone. The Washington Post's Brian Fung wrote, "Big Cable may have felled Seattle's mayor, but it couldn't stop this Colo. project." 

Our regular readers know that Comcast succeeded in defeating the Longmont measure in 2009 but the electoral would not be swayed by false promises and lies the second time in 2011. This year's proposal asked voters to approve a revenue bond for $45.3 million to speed up a planned expansion, which voters approved 2:1.

Contrary to past experience, Comcast and allies did not launch a full frontal assault in Longmont this year to sway the vote. Fung's article looks at the math for a possible  explanation:

There are 27,000 households in Longmont. Even if the city were to connect all of the eligible homes [close to the fiber ring] to its existing fiber network overnight, it would still reach only 1,100 residences. Cable companies therefore spent over half a million dollars [in 2011] trying to prevent four percent of city households from gaining access to municipal fiber on any reasonable timescale. That's around $600 a home, or six months' worth of Xfinity Triple Play.

Even if the cable companies decide it was not worth the fight in Longmont, they have shown repeatedly that they have cash, will travel. Fung's article describes another 2009 election in which the cable industry spent large to prevent public investment in fiber:

In North St. Paul, Minn., a 2009 ballot measure to let muni fiber move forward was defeated by a resounding 34-point margin. Opposition to the fledgling network, PolarNet, was led by the Minnesota Cable Communications Association. In the weeks leading up to the vote, it and other opposition groups spent some $40,000 campaigning against the measure. MCCA alone contributed more than $15,000 to the effort over the same period.

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Alex Marshall Coming to Humphrey School at U of Minnesota

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Six months ago, I wrote about a book by Alex Marshall, the Surprising Design of Market Economies. In a few weeks, he will be presenting to a small group at the Humphrey School of Public Affairs at the University of Minnesota. You can learn more about the event and register here. I am looking forward to this - Thursday, October 24, at Freeman Commons in the Humphrey School on the West Bank campus. 11:30 - 1:00.
In a thesis that has implications for policy wonks, economists and planners of all types, Marshall shows how government creates the essential institutions necessary for economic life, and how the typical debate between those who value the market and those who value government regulation is a false one. Marshall, a Senior Fellow at the Regional Plan Association in New York, is the author of two other books on urban planning, and is a former newspaper reporter. He was also a Loeb Fellow at Harvard University. His work has been published in many places, including The New York Times Magazine, Bloomberg View and The Washington Post.
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Small Minnesota Town, Annandale, Fed up With Slow DSL

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Yet another Minnesota town is fed up with slow, unreliable Internet access and is examining what it can do to make sure it has the network it needs to succeed in the modern economy. Annandale is 50 miles northwest of Minneapolis with a population of 3,200 and has Windstream as the telephone company. Windstream, as with other large firms that primarily serve rural America, offers a DSL more suited to the late 1990's than 2013. It has little capacity to invest in better networks, even if it had the willingness. We've covered Windstream several times in previous stories. After a flood of complaints from residents to City Hall about slow speeds and frequent outages, the City issued a request for proposals for a feasibility study that will explore alternatives to the present reliance on Windstream. Local leaders understand that the private sector is not likely to invest significantly in its community due to its density and rural location. But the town needs modern Internet access to retain and attract good jobs. The Annandale Advocate newspaper ran a story on September 17 but it is not available for non-subscribers.
At a chamber of commerce meeting later in the week Gunnarson added that strong broadband is a basic, essential feature of modern commerce. "New businesses expect good Internet. When you buy a car you expect tires on it. Unfortunately, our car has wooden tires," he said.
logo-annandale-advocate.jpg The same paper published a guest editorial by City Council members to explain how little power the City has over private providers. Many people falsely believe that towns are actively keeping competition out:
We even had some people angrily ask our staff why are we keeping the competition out. So to set the record straight, the city can't do much about it because it is all private wires, equipment, operations and corporate customer service. Also, a recent call to the PUC, the Public Utilities Commission, confirms that not much can be done since broadband is not regulated. Sorry folks. As far as letting in competition, we have zero say in that. Any other provider can come in any time.
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Monticello Fiber Price War Offers Key Lessons for Broadband Competition

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Monticello Minnesota may be located 40 miles outside Minneapolis, but it is the center of the planet when it comes to FTTH competition. We have tried and cannot identify another community localed on planet earth with two separate FTTH networks going head to head across the entire community. We have long written about Monticello, most recently to look at hypocritical criticism of the project (which gives me an opportunity to note a similar dynamic in Lafayette, Louisiana). And we have covered the disappointing news that the network has not produced enough revenue to make full bond payments. Short explanation for how Monticello came to be unique in having two FTTH networks: Monticello had poor Internet access from Charter and telephone company TDS. Each refused to invest after local businesses and elected officials implored for better networks. Monticello started building its own FTTH network (Monticello FiberNet) and TDS sued to stop the project while suddenly decided to upgrade its slow DSL to fiber. Lawsuit was tossed out and Monticello finished its network. In most community fiber networks, the DSL provider seems to fade away because it cannot offer the fast speeds of fiber or cable, so the market basically remains a duopoly with the community network replacing the telephone company (which continues to offer cheap, slow DSL to a small number of customers). But in Monticello, Charter and TDS engaged in a price war, which has really hurt the City's ability to generate enough revenue to pay its debt. Price wars are very hard on new market entrants because they have to amoritze the cost of their investment whereas the incumbents often have already done so. This means incumbents can almost always offer lower prices if they are determined to do so. In many communities, we have lacked clear evidence of predatory pricing - that is pricing below the actual cost of service to run competitors out of business. This would violate federal law (if any agency bothered to enforce it).
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WindomNet Creates Jobs, Benefits for SW Minnesota - Community Broadband Bits Episode #64

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The small town of Windom in southwest Minnesota has long been one of the smallest FTTH networks in the nation. I have long wanted to bring WindomNet General Manager Dan Olsen on our show because it has some of the best anecdotes in the world of community owned networks. We finally got him! To understand WindomNet, you should know that it has fewer households than what many of us consider to be the minimum threshold for a viable triple-play FTTH network. Not only have they made it work, they have attracted numerous employers to town, as our interview discusses. It also kept a local employer located just outside of town in the area after a massive telelphone company operating in Minnesota found itself unable to provide the service that business requested. Tiny Windom ran a fiber out to the business and kept them in the region. The network has expanded to nearby farm towns with the help of a broadband stimulus award. Even now, after bringing connections to a rural region that the big providers have largely ignored, the big cable and CenturyLink lobbyists that live in the capital in Saint Paul have relentlessly lied about Windom, calling it a failure and presenting skewed figures to suggest the investment had not succeeded. In our discussion, Dan and I explore the reality of WindomNet and how it is benefiting a much larger region beyond its own borders. Read all of our coverage about Windom here. Read the transcript for this show here. We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address. This show is 18 minutes long and can be played below on this page or subscribe via iTunes or via the tool of your choice using this feed. Listen to previous episodes here. You can can download this Mp3 file directly from here. Find more episodes in our podcast index. Thanks to Break the Bans for the music, licensed using Creative Commons.

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Monticello Moves Closer to Settlement with Bondholders

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It has been about a year since we checked in on FiberNet Monticello, a city-owned FTTH network about 40 miles northwest of Minneapolis. At that time, the network was generating insufficient revenue to meet debt payments, the private company operating the network (HBC) was stepping down, and Gigabit Squared was kicking the tires. Since then, Gigabit Squared and Monticello decided against a partnership and the City ceased making payments to bondholders. Previously, the City had covered the difference between revenues and debt payments by borrowing from the City's liquor store fund, a municipal enterprise fund. Monticello had financed the network with unbacked revenue bonds, meaning investors understood from the start that the full faith and credit of taxpayers would not "make them whole" in the event that the network did not create the revenues necessary to pay back the bond. Because Monticello chose that financing method, it had to pay a higher interest rate - those who buy bonds understand the differences in risk with different types of bonds and rates. However, the City has been negotiating with bondholders for a settlement to avoid potential lawsuits over the telecom utility and because this is a typically what how these situations are worked out. Bondholders will "take a haircut" in the parlance of finance rather than risk a total loss. Last week, Monticello City Council approved a $5.75 million proposed settlement in addition to the remaining funds left in the reserve fund, totaling approximately $8 million from an outstanding bond of $26 million. Final resolution may take many more months, but the major arguments seem to be worked out. This means that Monticello will own and continue to operate FiberNet Monticello. It also means that rather than having a network financed by revenue bonds, the network will have benefited from City funds from the liquor store and will almost certainly be re-financed with other City funds.
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Lake County Project Moves Forward Despite Delays

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After many delays, Lake County is now in the process of hanging in fiber for its extensive fiber optic network project called Lake Connections. A recent report from WDIO.com in Duluth reminds us that Mediacom and other opponents of the project have continued to obstruct the progress of a network that will connect thousands of households who presently have no broadband options.

As we have seen in a few other stimulus-supported projects, companies like Mediacom are trying to protect their overpriced, last-generation networks by working with Republicans that want to discredit anything stimulus-related. It is sad to see so many rural households caught in the crossfire, particularly knowing that Mediacom has no plans to expand outside a few towns in the County - this means that if Mediacom were able to stop this project, many people would have no hope of getting real access to the Internet.

From the article and the video we have reposted below:

The Rural Utilities Service (RUS) is the branch of the USDA that approves money spent on the project. County Administrator Matt Huddleston said there is no indication the money will stop flowing.

“In the meantime we're focused on building the network and RUS is continually seeing our contracts move to them, and they're approving them and providing us the funds at this time to continue building it,” Huddleston said.

He said $20 million is tied up in contracts, and construction will move forward.

Connections to homes and businesses in Two Harbors and Silver Bay should be finished by July according to officials. Then a connection to Duluth will be built to connect the entire network to the rest of the world. Officials said the network will reach up to Ely by the end of 2015.

The project is divided into three phases with this first phase in full swing. According to the most recent Gaining Speed Newsetter [PDF], over 4,600 feet of fiber was placed on poles in Silver Bay during the first week of April.

The project has been slowed both by the intervention of Mediacom and its own decision to remove the original management team and bring in a new group.

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