December 1, 2004 10:00 AM PST

Carriers throw their weight around towns

When Annie Collins walked into a meeting with her local paper's editorial board, she didn't expect to see four executives from her local phone and cable companies waiting for her.

Collins, a housewife from Geneva, Ill., was heading a grassroots effort to have municipalities install and run a high-speed fiber optic Internet network across the Tri-Cities region just west of Chicago. Her group, Fiber For Our Future, collected enough signatures to put a referendum on the November ballot, prompting the region's top executives, including the president of SBC Communications in Illinois, to show up for the meeting.

Fiber For Our Future didn't stand a chance. Against a tidal wave of attack ads and mailings funded by SBC and its local cable provider Comcast, the group lost its referendum vote by about 10 percentage points.

"We simply got steamrolled by SBC and Comcast," she said. "It was a huge marketing blitz against a local citizen's group."

News.context

What's new:
Baby Bells and cable companies are teaming up to block cities from building their own broadband Internet services.

Bottom line:
Cities with broadband ambitions should expect a no-holds battle from incumbent providers trying to protect their turf.

The fact that industry giants are flexing their muscles in this community, known for its annual Swedish Festival and its kitschy French stores, illustrates a new wrinkle in the nation's ambitions to embrace broadband. As competition between cable and phone companies becomes increasingly cutthroat, these arch-rivals are shelving their differences, teaming up to derail community broadband projects such as the one in the Tri-Cities.

"The trend is definitely that they're working together and pooling resources," said Mike DiMauro, who heads the industry group Fiber to the Home Council.

This alliance of odd couples is making a multipronged attack, from lobbying state legislators to ban government-run broadband networks, to flooding airwaves and mailboxes with messages against these projects. As evidence of their success, the incumbents won a huge victory in the spring when the U.S. Supreme Court ruled that states can pass laws barring municipalities from building broadband networks that could compete with private companies.

Just weeks ago, Verizon Communications successfully lobbied for a state bill to bar local governments from offering their own broadband services. The bill, which was signed into law late Tuesday, was considered a blow to an ambitious effort by Philadelphia to offer wireless broadband service to its residents. Though city and carrier reached an agreement that will let Philadelphia's plan go forward, the law demonstrates the political power major providers can wield.

Protecting their investments
Cable companies and the Baby Bell phone companies have their reasons for resisting municipal plans. In the 1990s, the cable industry invested an estimated $75 billion to upgrade its networks, allowing providers to sell broadband Internet access, phone and digital TV to their customers.

The Bells are planning their own ambitious upgrades as a competitive response to cable. SBC will spend $4 billion to upgrade its aging copper network with fiber optic lines that will stretch to neighborhood "nodes." Verizon this year is expected to spend $800 million to bring fiber into customers' homes, and plans to reach 3 million homes by the end of next year.

With so much money being invested for better services and more bandwidth into homes, cable and the Bells consider government efforts unfair to private businesses.

"The issue is (that the municipalities) control rights of way, and to regulate us at same time they're competing with us is a recipe for trouble," said Dave Pacholczyk, an SBC spokesman.


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The firms also point out that many projects across the country are awash in red ink, warning that residents will eventually foot the bill for government missteps.

Efforts by cities to create their own broadband networks are not new. But most municipal broadband projects can be found outside major cities, particularly in smaller, rural areas beyond the Bells and cable's immediate expansion plans.

Most of these smaller cities are choosing fiber optic lines, which can deliver up to 100mbps of bandwidth into each household. Many of these small cities feel their providers are too slow--or too leery of the return on investment--to bring them the broadband service they want. They've chosen to take matters into their own hands, hoping their broadband projects will attract more businesses or empower their local utilities.

Whether or not these initiatives can reach their goal of at least paying for themselves, residents in underserved areas are sending a signal. They're tired of waiting for their only broadband providers to get around

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4 comments

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Telecom and Cable worst customer service ever!
Telecom and cable companies (especially ones with monopolies in certain areas) have the worst customer service and just plain old worse services of any industry. They are slow, expensive, and show no respect for their customers. Their business models are stuck in the 50es and they are slow to adopt anything.

Crying foul and playing the billion dollar lobbying card because informed consumers are tired of being ignored or being treated like dirt expected. When community run systems can be cheaper to build, run, and versitile for end customers. You bet the Fat Cat bells will smash it into the group.

Because they have monopolies in most areas (government sanctioned mind you) they have no reason to work hard, provide quality service at a resonable price.

Like the fact that the technology industry is starting to beat the Bells at their own game. By providing streaming TV and movies with a true on-demand system that soon will be in HDTV quality. All through both cable and DSL lines.

Cancel your subscriptions and get basic cable. Then signup for internet access and subscript to (half the price) streaming TV. Boom! You get more choice at half the price.

I'm sure the Cable company will block access to services via a the internet that stream video or music. Just wait.
Posted by zeroplane (286 comments )
Reply Link Flag
Really........
If you don't like the Telcoms or the Cable nets, just where do
you get an internet connection????? Satellite feed??? Sure, if you
like low bandwidth.

Seems like you're left with two cans and a mile of string.
Posted by Earl Benser (4310 comments )
Link Flag
Wake Up!
The local and state government is "supposed" to have more
power than the federal. Folks should start waking up and realize
how much worse we are since the feds broke up Ma Bell. Now
she is Mommie Dearest Bell with multiple personalities.

The wires on poles dates back to the 40's. The phone companies
spend $billions on "self" advertising (like they have competition)
and then turnaround and cry "we need subsidies" from the feds.
Then they hikes rates and add "taxes" to cover their costs (taxes
even the feds never get). Then they sell your info and charge you
again if you want privacy.

Since they know they will never make a profit, they instead show
loss after loss, create situations that "require" the CWA to
intervene, and fail to support new technology (rather look at DSL
and how "bell" sat and sucked up vendor's customer, all the
while taking DSL clients, charging now-defunct DSL providers
for loopback tests and lethargically installing CO equipment to
discourage competition...).

Communication is social. Enterprise is about innovation, not
suffocation. The phone companies are so far down the politco's
pockets that they can pick their toes while doing the M-word!

Vo-IP over cable. (funny, phone company owns the company
that installs cell towers. Funny that Verizon is now pushing
direct tv. I say, vote Powell out of the FTC and put someone like
Bill gates in. MS phones for free!) Hey, if you think of a way to
free up communication without sacrificing quality...go for it! You
have my vote-
Posted by Below Meigh (249 comments )
Reply Link Flag
Keep microsoft OUT
Please keep microsoft out of any communication plans unless you want to unplug and plug in your phones 10 times before having a 5 minute phone conversation.
Posted by kieranmullen (1070 comments )
Link Flag
 

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