Sanborn and Gentry Buchan live in a 1920s bungalow less than two miles from the center of Wilson, a city of 50,000 people a half hour east of Raleigh. The mother of a 2-year-old son, Gentry works from home as a sales rep for a cell phone company. Sanborn is home when he’s not traveling as a tobacco buyer, a rare job these days, but one that used to offer reliable work in Wilson, once a major world tobacco market.
The Buchans have better Internet access than you do, wherever you live in the Triangle, thanks to the $28 million fiber-to-the-home network the city of Wilson is installing to every address in its city limits. That network powers Greenlight, Wilson’s fiber-optic-based Internet, television and phone service. Like its water, sewer and electricity, the city now provides high-speed Internet as another public utility.
⇒ View the slide show, which includes a demonstration of how fiber-optic bundles are made.
The municipal broadband movement fills the big gap between the Internet speeds Americans need and those they’re getting from a profit-driven telecommunications industry. Wilson is on the cutting edge of that movement. It is among the newest of 44 publicly owned fiber networks serving more than 60 communities across the country, according to an April study by the Fiber to the Home Council, a trade group.
In Salisbury, near Charlotte, city officials have voted to proceed with a similar network, and nationally, 10 more cities are expected to come online this year. Officials from about a dozen municipalities have visited Wilson, and more will closely watch its network’s evolution as they consider launching their own systems.
However, these cities face powerful opposition from telephone and cable operators who are fighting municipal broadband efforts in state legislatures across the country.
These opponents include companies like Time Warner, which has provided cable service in Wilson for 30 years. Although the Buchans pay roughly $240 each month for Time Warner’s premium cable TV and broadband services, they signed on as trial subscribers to Greenlight, allowing them to connect to the city’s service for free for six weeks. Greenlight’s “triple-play” package is very similar to what Time Warner offers: roughly the same 300 TV channels, a High Definition signal, pay-per-view movies and DVR boxes, and all the typical phone service features.
Yet there’s one major difference: speed. Greenlight’s Internet starts at 10 Megabits per second and goes up to 100, a speed common in nations such as Japan and South Korea, yet rare in the United States. Time Warner’s residential Road Runner service offers no higher than 10 Mbps in much of the state. In Wilson, however, the company recently upped its top-tier speed to 15 Mbps “because of the competitive environment,” a Time Warner spokesperson said.
Because she works from home, Gentry subscribed to Time Warner’s “business class” broadband, which company representatives insist can be customized to up to 1 Gigabit per second. Yet, Gentry said even the slowest Greenlight connection seemed 10 times faster than her cable-based connection. “It’s blistering fast,” she said. To compare providers, she kept one office computer connected to Time Warner and the other to Greenlight. “It’s amazing,” she said of the difference in speed. “All the engineers at work want to come play at my house because there’s no fiber-optics anywhere else in eastern North Carolina.”
Greenlight’s upload speeds are as fast as its download speeds, which is unusual for most consumer Internet services. Yet as more people e-mail photos and post videos on YouTube, upload speeds are becoming an important part of the way people use broadband. “You think of it like a two-way street, and you’ve got four lanes coming in and four lanes going out,” Sanborn said. “I would definitely say it’s the autobahn.”
Rural areas are often stuck with slow dial-up or expensive satellite Internet service. Even urban centers like the high-tech Triangle, where some competition exists, are missing opportunities. The importance of highly efficient Internet service is more than a matter of better e-mail access or the ability to work from home. A lack of fast, widely available networks limits communities’ abilities to manage basic utilities like water and sewer service, to respond to emergencies, and to deliver medical care.
The cable and phone carriers don’t provide this essential service unless they decide it will make enough money to be worthwhile. Increasing deregulation of the telecommunications industry has helped prop up monopolieswithout requiring the companies that deliver most of the nation’s Internet service to invest in the infrastructure that would allow broadband speed to increase, or costs to decrease.
So with almost no national leadership on the issue, and little from the states, more local governments have decided they need to go into the trenchesboth to lay the cable and to fight for their right to do so.
“Our city council believes that broadband is an essential utility in 2008,” said Wilson spokesperson Brian Bowman. “Wilson has a history of tobacco and textiles, and while they’re still important, they don’t carry the weight they used to. We believe that broadband is a critical tool that we’ll need to continue attracting new jobs to the area.”
Bowman said city officials first approached private companiesincluding Time Warner and local phone provider Embarq, which offers DSL in Wilsonand asked if they would be willing to build a fiber network. The private companies declined. In 2006, the city council voted unanimously to move ahead on its own.
Wilson could have stopped at building the fiber network and then invited private companies to bid to provide the services themselves. That model has worked well for other muni broadband projects. In fact, city officials briefly partnered with Embarq on phone service, but the parties couldn’t come to terms.
As expected, private companies aren’t happy competing with cities for customers.
“We don’t believe it’s a good idea for public entities to compete with private business because it’s inherently not a level playing field,” said Embarq spokesperson Tom Matthews. “We’re going to be competing against purely public money.”
As Wilson broke ground for its network last summer, cable and telecommunications industry lobbyists headed to Raleigh to try to stop it in the General Assembly by pushing the Local Government Fair Competition Act, which would have set requirements and restrictions for any local government seeking to provide a telecommunications service to its residents. (See “Bill to limit broadband fails,” Aug. 1, 2007.)
If passed, the bill wouldn’t necessarily have halted municipal projects like Wilson’s. But, as Bowman said, “It would have sandbagged us. It would have made it so difficult and cost-prohibitive that it wouldn’t have been worth it.”
That bill failed decisivelyfor this legislative session, at least. But a tug of war continues in the state legislature over how to deliver better broadband to North Carolina’s citizens.
If you have any doubt about whether broadband is an issue that matters to people, ask state Rep. Bill Faison. A House Democrat representing Orange and Caswell counties, Faison said the No. 1 constituent complaint he hears is a lack of access to broadband.
“I can’t go to a public meeting anywhere in Orange or Caswell without someone coming up to me and saying, ‘We’ve got a problem with Internet and here’s what it is,’” Faison said. “No one comes up and says, ‘We’ve got a problem with Medicaid,’ or ‘We’ve got a problem with the wildlife commission.’ No one complains about the Department of Transportation not fixing a road in front of their house. They all show up and want high-speed Internet.’”
Faison hears these complaints in his own home, too. There’s no DSL or cable available for his Cedar Grove farmhouse, where the nearest neighbor is three to five miles down the road. “My wife and kids are constantly on my case about it,” Faison said.
Like a lot of rural dwellers, they looked into satellite services like HughesNet and WildBlue, which can reach anywhere but require a $300 initial investment in a dish and charge $70 a month for a 1 Mbps connection.
And Faison isn’t the only legislator hearing these complaints. Speaker of the House Joe Hackney, a Democrat from Chatham County, said individuals contact his office about lack of broadband more than any other issue.
In the same way a congressman might shepherd a visa application though the State Department, Hackney and his staff intervene on behalf of would-be broadband customers by calling Embarq, the phone company that serves Chatham County, to determine whether there’s an access point nearby and when service will become available. Hackney estimated his office has helped dozens of constituents over the years.
“It is very satisfying when you’re able to help somebody with it,” he said, “because it allows them to work from home and changes their life.”
In May, Hackney granted Faison permission to convene a House Select Committee on High-Speed Internet in Rural Areas. The committee’s primary task was to determine what’s available and to identify the service gaps. “You have to know where it is and where it isn’t to see where you have a problem,” he said.
To that end, the legislators produced a bill that would require all Internet service providers in the state to provide maps and other data about service availability to the e-NC Authority, a state agency tasked with connecting every household in North Carolina to broadband.
Lobbyists for cable and phone companies have objected to the proposal, arguing to the select committee that the information requirements are too demanding, data in some cases isn’t available, and that giving it to a state agency means placing proprietary business information in the public domain.
“We don’t object to the idea of having some level of reporting in place,” said Time Warner spokesperson Melissa Buscher. “However, we believe this bill goes about it the wrong way. It places an undue burden on providers.”
Jane Smith Patterson, head of e-NC, estimated about 80 percent of the state’s households now have access to broadband Internet, but said her agency’s efforts to put together a comprehensive map of coverage areas have been hampered by a lack of information. She said she has only 75 percent of what she needs from cable and telecom companies. (e-NC has not yet taken an official position on the bill.)
The cable and telecommunications industries flex a lot of muscle in the General Assembly. Often, industry lobbyists outnumber members of the legislative committees meeting to discuss a particular bill. (Time Warner has six registered lobbyists this year; the N.C. Cable Telecommunications Association has seven; AT&T, eight; Embarq, 12.)
Faison finds their objections frustrating and seems determined to push back. “The major telephone and cable companies say, ‘If it makes us money, fine, but if it’s not going to make enough money, we’re not really interested in doing it,’” he said.
“I was talking with a guy from the cable industry the other day,” Faison continued. “I said, ‘There are two ways to look at this thing. One is to commit yourself to providing the information and tackle the problems. The other thing is to stand over here and look through the briar patch and say, “You know, we really should get to that, but there’s all these briars in the way.” I want you to know that I’m here to burden down the briar patch.’ He looked at me almost dumbfounded.
“I said, ‘Take a different approach to this. Don’t tell me you just find it insurmountable almost to tell me where it is and isn’t. That’s neither accurate, fair nor right.’”
One of the people calling Speaker Hackney’s office is Joseph O’Brien, a 26-year-old resident of Silk Hope, an unincorporated community in Chatham County. O’Brien has organized a petition signed by more than 70 of his neighbors asking Embarq to extend DSL service to their homes.
“Most people here have dial-up, and they hate it,” O’Brien said. It’s more expensive than DSL, in fact, if you pay for a dedicated phone line. “You have people literally paying more for less.”
When O’Brien started knocking on his neighbors’ doors, he was thinking about his own family. Soon after O’Brien graduated college, his father was diagnosed with pancreatic cancer, so the young man shelved plans to travel abroad and instead came home. His father has since passed away.
Before O’Brien leaves Chatham County, he wants to find a way to get his mother a fast, reliable connection to the Internet. Banking online, looking at her friends’ vacation pictures, doing the work for a course she’s taking at UNC-Greensboroit’s all virtually impossible through a dial-up connection.
As O’Brien researched, he discovered that he and his mother live just half a mile from an Embarq switching station that’s not yet equipped to offer DSL service to phone lines. Half a mile in another direction is the territorial boundary of the Randolph Telephone Company, a community-owned utility that’s been offering DSL for years.
While Embarq has ignored much of Silk Hope, the company has pursued newer, denser developments in eastern Chatham County. “It was never a case that they couldn’t have made money on usthey could,” O’Brien said. “It was that there were always quicker profits to be chased elsewhere in areas where there was cable, where there were competing services they had to fight against. Here, they know they can afford to wait. We’re safe money for them.”
O’Brien said he started making his case around education. Kids need Internet access to do their schoolwork if they want to compete in the information-based economy.
While meeting his neighbors, however, he grew to appreciate that the need runs much deeper. There’s a pilot with an airstrip on his property, a man who raises exotic plants, and more than one Shih Tzu breeder. “It’s out here, with these little businesses, this is precisely the sort of environment that a networked universe can really benefit and from which that network can really benefit. It’s not suburban kids on MySpace,” O’Brien said. “It’s places out here where people who are doing their thing can effectively market their wares to the broader market.”
There’s good news for O’Brien: Embarq recently decided to deploy DSL to his area of the county by late fall.
“I don’t feel like it’s much of an accomplishment,” O’Brien said. “When you really want to fight for something, you want it to change the status quo or bring something new. I’m not going to be able to convince myself that I didn’t just get us to where we ought to have been in the first place.”
Embarq has more rural customers than either of the other two major phone carriers in the state, AT&T (formerly BellSouth) and Verizon. As with any private company, however, Matthews said decisions about where to offer service come down to money.
“We would love to deploy DSL everywhere,” he said. “We try to make smart financial decisions not only for shareholders but customers. In the very rural areas, sometimes it would take two, three or more years to even pay for the investment.” The cost of equipment, he explains, is the same whether you’re serving 1,000 customers or 100, so the cost per customer goes up dramatically the more rural the area. At an average monthly cost of about $25, “How long does that take?” Matthews asked.
The solution, the industry says, is financial incentives. “The bigger companies would not go in and offer that service otherwise,” Patterson said.
“Of course they want the state to provide some funds to speed it up, which we have a limited capacity to do,” said Speaker Hackney. “There’s a little too much of that.”
Patterson has dozens of success stories about the power of broadband to transform North Carolina’s most economically distressed communities. Her agency, e-NC, has established technology centers that she says have created nearly 1,500 jobs for African-American women in Anson County, farmers in Rockingham County and many others in some of the most remote areas of the state.
Economic incentives are a critical tool for e-NC’s mission, Patterson says. Since 2001, the agency has distributed about $12 million in funding from MCNC, an RTP-based nonprofit, to private companies, nonprofits and co-op utilities.
Last year, e-NC received $1.2 million from the General Assemblyits first state tax moneyfor a matching grant to launch a DSL project in the state’s four poorest counties: Warren, Jones, Gates and Green. Embarq was one of only two companies that bid to offer service, providing a match of up to $1.25 for every $1 of state money. “Embarq paid more than we paid to cover those counties with access,” Patterson said. Only 46 percent of households in Warren County have high-speed access today, but when the project’s complete, that number will jump to 86 percent.
This year, e-NC is asking for $5.5 million for similar matching grants over the next two years. With the economy struggling and so many pressing social needs, it’s tough to argue for financial incentives for private industry, though Patterson will make the case that the money will lure good jobs and improve education.
In general, Patterson said, her board prefers that private industry offer service whenever possible. In some cases, however, even incentives can’t entice the private sector to step upand that’s when municipalities should have the option to do it themselves. “If they won’t do it, then I think the cities and local governments have to do something,” Patterson said.
Yet, not every city should undertake projects like Wilson’s. “We try to get the message out to municipalities to really be careful when they decide to do this, to look at every aspect of it because it’s complicated, and it’s not the business they’re normally in,” Patterson said.
Christopher Mitchell, director of the Telecommunications as Commons Initiative for the Institute for Local Self Reliance in Minneapolis, said ideally, the city would hire private providers to run the services. “You want to encourage other service providers to have the freedom to innovate and use the networks for different things. Almost any community would rather not deal with the hassle of providing services.”
Often, as in Wilson’s case, the economics don’t work out, and communities offer services to pay for the high cost of building the network.
In either case, public ownership can ensure that local communities have the power to set terms that serve the public interest. “If the community wants to make sure that it has the best network for its needs, it literally needs to build it and fund it itself,” Mitchell said.
Mitchell has visited public networks in 45 states, including Wilson’s. “I think communities like Wilson and Salisbury are way head of the curve,” he said. The nation lacks a national strategy for deploying these networks. “In many cases, municipalities are the farthest ahead of making sure that networks in the United States can be competitive with our international peers.”
When Wilson entered the broadband business, it did so with a track record. As the nation’s cities began to electrify, Wilson’s leaders realized that the private sector wasn’t necessarily going to put them on the grid fast enough. The city launched its own electricity service in 1893.
The city’s detractors use that example to spin the broadband issue; these public relations maneuvers illustrate an ongoing battle over customers and public policy.
Time Warner’s Buscher said that Wilson’s high utility rates (which are 26 percent higher than Progress Energy and 60 percent higher than Duke Energy) indicate that the city shouldn’t be in the telecommunications business. “This year they’re going to try to increase a lot of their other utility rates. Why should an elderly person or someone on a fixed income have to subsidize a project that’s already offered by the private sector?”
The company’s lobbyists have repeatedly made the same argument in the General Assembly.
Yet, while Wilson Energy has proposed a 5 percent rate increase, power companies like Progress Energy are raising theirs by double digits. And Wilson’s electric utility money isn’t subsidizing Greenlight. No tax money was used to launch the service. The city sold bonds to private investors after receiving approval from the state’s Local Government Commission. If the service doesn’t pay for itself, however, Wilson has two options for paying its debt: It can raise other utility rates, or it can raise taxes.
Bowman said under the Greenlight business modelwhich, unlike Time Warner’s, is public recordonly 30 percent of households would have to subscribe. The industry average is 30 to 40 percent, but an April study of publicly owned fiber networks by market research firm RVA LLC found an average of 54 percent subscribed within the first four years.
There’s a grain of truth to the industry’s criticism, though it doesn’t reflect on Wilson specifically. Wilson is one of 33 ElectriCities in eastern North Carolina that buys electricity from the NC Eastern Municipal Power Agency. ElectriCities has badly managed its debt, so rates are high across the boardbut Wilson’s are the second-lowest among them.
“Their goal is to convince citizens that we don’t know what we’re doing,” Bowman said of the cable company’s criticisms. “City of Wilson employees rescue people from fires, prevent crime and provide clean water to more than 50,000 customers. In spite of their efforts to cast doubt on the city’s capabilities, it’s safe to say that yes, we can provide superior service for cable, Internet and phone.”
Before Greenlight’s prices were announced, the Buchans were unsure if they would subscribe. Given the city’s high electricity rates, they were skeptical that Greenlight would be comparable in price to Time Warner. “That’s going to be the kicker,” Sanborn said.
A few days ago, the Buchans signed up for cable, Internet and phone service through Greenlight. Even with two DVR boxes, more sports channels and 20 Mbps in speed, Gentry anticipates paying $50 less per month. “When I called to cancel Time Warner, they told me there was no way I was getting the speeds I was getting for the price I was payingthey didn’t believe me.”
A call to arms for national broadband
“Broadband is so important across so many different areas of life, it is in many respects like highways and electricity,” said Jim Baller, a Washington-based attorney whose firm, Baller-Herbst, represents local governments and publicly owned utilities on technology matters.
Yet when it comes to building the infrastructure of the future, you can’t get there from here.
“We have adopted a policy of letting the private sector do what they can do and pretty much leaving it at that,” said Baller. “The result of that is that we are ranked at very mediocre levels in just about all of the world standards of success in broadband deployment.”
Technology experts and, increasingly, major U.S. companies agree the country is falling behind in economic opportunity compared to Japan, Korea, Sweden, France and a half-dozen other countries that rate higher than the United States in broadband availability, speed and price.
The Federal Communications Commission recently revised its definition of “broadband,” from 200 kilobits per second to 768 kbps, but even that’s pitifully slow, when you consider that 85 percent of households in Japan have access to speeds of up to 100 megabits per second.
Baller hopes to light a fire under the nation’s leadersincluding North Carolina legislators.
In May, he addressed members of the House Select Committee on Rural Internet Access, urging the General Assembly to treat broadband as a utility essential to the state’s economic future.
Doing so means, in part, putting up public money for incentive grants and adopting policies that encourage innovation and true competition. “It seems to me that it is an investment we can’t afford not to make if we’re going to be a great nation,” he said.
It also means not impeding local governments like Wilson that decide to take on projects themselves.
“This is not a public versus private issue,” Baller said. “It shouldn’t be viewed that way. Developing the underlying fiber-to-the-home system is tremendously important for the United States. Whether the systems are built by the public or private sector, or some combination, we definitely need many, many more of these system much faster than we’re deploying them right now.”
Last year, Baller came to Raleigh to help a coalition of local communities fight the Local Government Fair Competition Act. The bill would have imposed strict requirements and restrictions for any local government seeking to provide telecommunications services, effectively making public broadband projects like Wilson’s impossible. Telephone and cable companies, who argued it was necessary to level the playing field, backed the bill heavily.
The legislation failed not only because cities like Wilson objected to it, but also because companies including Google and Intel registered their objections.
While a few states have passed laws like the one the General Assembly voted down, Baller said those initiatives have become less popular in the past two to three years. “The major private sector potential beneficiaries of bigger broadband are saying, ‘This is crazy. This is not good for the communities involved, and it’s not good for the country.’”
Following the legislative battle, e-NC Authority, an agency tasked with extending broadband Internet to every household in the state, commissioned Baller to write a report on the issue.
That paper (available here) has evolved into a call to arms for a national broadband strategy, which Baller will present in Washington June 23, alongside FCC Commissioners Michael Copps and Jonathan Adelstein, as well as e-NC Executive Director Jane Smith Patterson. Fiona Morgan
